Typically the larger houses (a 3/3 isn't large down here) barely make rent to cover RE taxes. 10% down on an $800,000 purchase means you're running very tight margins if you are looking to make any money.

If they suddenly found themselves with larger than expected/required/needed reserves they would then lower the monthly charges.

I had the opportunity to make the owner's suite much larger but neglected to because I thought the size fit within the context of the home.

The more problems you solve the larger return you can expect in general, but as an investor who has does large renovations for the past 5 years, I am definitely shifting into more passive deals that may offer lower returns going forward, and I am okay with that at this point. 

Examples being common things that take place with tenant turnover or larger expenses like a new AC or roof?

I typically save the larger increases for turnover.

I don't believe they are as necessary for a small business as they would be for a larger operation.

But a few 4-plexes, or buy some larger multi-unit properties and you will retire and have many times more income, more appreciated property value and be rich.you can't do what is in the chart below with single-family homes with the exception of when you get super lucky and a property you purchase appreciates in value, but with multi-unit properties and especially when you purchase value-add properties you can plan, project very accurately and force profits 3 to 5 better than what is in the chart below.

For a larger multifamily (100+ units), the work just begins once you close.Having good staff (manager, leasing and maintenance) is vital.

That usually equates to larger proceeds from the acquisition fee.