In the end, if these are expected, and treated as numbers (say 12% for vacancy and 20% for repairs and cap ex), and the property still cash flows well, am I crazy? 

Owner occupiedIn search of a loan that will allow the purchase of a FORCLOSED home in need of repair, repairs to be funded and done by myself and specialty craftsman that I have connections with, without 20% down.

We own primary home with 50k equity.Want to invest in lower risk, low or no repair/rehab work real estate.We will sincerely appreciate all advice.

Is 65% x arv - repairs, a good estimate to value a a multifamily rental property ?

I purchased a vacant tax property, made repairs, then received redemption affidavit from taxpayer, certified mailed them improvement invoice within 10 days.

We talked about training tenants and keeping them accountable for small repairs on things they break (generally under $150 and things that can reasonably be shown they caused to break, but generally not plumbing and electrical).

I had a claim (water damage, mitigation, and repairs) in one of the houses which resulted a hike on my premium. 

Speak to your CPA; s/he should assist you.

I actually wasn't accurate enough in my post above - it'll cashflow for us within the next year or two, it just needed lots of repairs over the last few years (bought as a fixer-upper, built in late 1800's).   

Having the place declared uninhabitable usually works to the advantage of a tenant anyway, and may require the landlord (eventually you) to make repairs to make it habitable (although a tenant's recourse is typically withholding of rent, so ...).