I'm reviewing an OM for a 12-unit Class A property and the T-6 annualized expenses has the property insurance at $7,068 ($589/unit), but the Broker's Year 1 pro-forma has the property insurance at $3k ($250/unit).  

Is there a way to get tenants to pay for water to lower that expense?

This current BRRR will actually profit about $350/mo positive cash flow after all expenses including holdbacks for vacancy, repair, capx, etc.  

Here are the numbers:Original Loan Amount: $ 42,700.00Loan Origination Date: 12/09/2013First Payment Due Date: 01/01/2014Last Payment Date: 9/27/2018Current Loan Balance: $ 41,802.77Current Interest Rate: 9.900%Current P&I Payment:$ 371.57Current Escrow Payment:$ 30.43Maturity Date:12/01/2043Term Remaining: 302Loan Type :CFDFMV: $87,500The WorkoutWe picked up this asset for $18,500 ( 44% of UPB)Expense Cost: $2000 (Includes, servicing, initial due diligence, forced place insurance, back taxes and misc)Contingency Fund $2,500All in Cost= $23,0008 Months of Payments = $2968Reinstatemet fee from borrower = $2000Total Income received $4968We sold this property after 1 year as a re-performer for $35,500 (Approximately 85% of UPB)$35,500 + $4968 = $40,468 Total ROI = 76%We're excited with how this one turned out and can't wait to see what we will do with our next one!

From an expenses POV: I would add 10% for management.

This is because traditional banks/lenders are going to go off the income you report to the IRS, which especially for small business is typically really low after expenses/write-offs (investors often run into these issues as well after investment property write-offs).

Consider it a tuition expense.

Numbers are as follows....This is my first deal and am looking for some more experienced guidance.Monthly Gross Rents: $3700Laundry & MISC: $100Annual Scheduled Income: $45,600Vacancy 2% & Loss: $1000Gross Income: $44,600Expenses:Taxes: $10,000Insurance: $1500Trash: $600Lawn Maintenance: $800Snow Removal: $500Gas: $500Electric: $1300Cleaning/Janitorial: $900Repairs: $1000Turnover Replacements: $1500Legal: $300Total Projected Expenses: $18,900Projected NOI (before debt service): $25,700

I know the benefits are home warranty and no cap x or repairs expense needed in the beginning.

Water bill looks very low for a 16 family and you will see higher expenses.