I anticipate serious cap ex expenditures coming his way. 

I recommend you budget 5% of the gross rent (for the whole place, even what the rent would be if you were living in it as a tenant) for repairs and 5% for capital expenditures.

The cash flow is a bit sub par on this one and I anticipate some larger expenditures coming my way in a year or two so I'm contemplating this as an option.

If you haven’t already, start saving for major capital expenditures.

2 are not cashflowing with the required expenses for vacancy at 10%, repairs at 10% and capital expenditures at 5%.

Ensure you account for expenses like maintenance, vacancy, or capital expenditures.

I am not sure if I can put zero for capital expenditures, since it is new construction."

As the investor gains experience, they are not only able to more successfully foresee the “bumps” along the way, able to handle recessions, temporary negative cash flow, unforeseen capital expenditures without panicking, but will also recognize the opportunities necessary to turn a loss into a break even.

You want an investment that pays for itself, including mortgage, taxes, insurance, maintenance, and even some money set aside for a reserve to cover vacancies and capital expenditures.

The study could also identify the opportunity to capture additional benefits such as dispositions, and repair and maintenance expenditures.