I'd go with 15% combined.

Yes you may have to, is there anyway to combine the rehab costs in with the value of the property now?

They constantly ask for improvments but don't want to pay for anything, after all they DESERVE special treatment.

I figure a combined 15% for CapEx and Repairs.What about water/sewer?

If it's two people (friends, married, dating, whatever) then I combine their income to verify they make 3x the rent.

For my rental I used craigslist and Facebook marketplace and had over 50 inquires just with the two combined. 

The plan is to sell him one of my properties.I currently do not qualify with banks due to my income to do a cash out refi.My plan is to pull enough equity to pay him a deal fee and enough to create 3 new rentals and combine my current debt all into a 30 year mortgage payment to allow me more yearly cash flow.I will still have ownership of the rental but he will be the owner on paper.

@Jonathan Ard , my advice would be to hold, and start bankrolling your next investment from the cashflow you're getting currently, combined with income you are able to bring in from other sources. 

I'd figure 8%, but his is local.CapEx and Repairs are usually ~15% combined.

Or maybe it's a combination of both?