Looking at investing in an upper and lower duplex. I'm wondering how others analyze their investment cost. Obviously the down pmt, closing costs, repairs, and inspection are all included in the initial investment, but would reserves for the property also be included. In "How to Build Real Estate Empire" Mark F says to have $10,000 in reserves for each property, should this be calculated as part of the initial investment when calculating cash on cash?
Also, when do we draw the line for setting aside money for maintenence and vacancy expenses? If we have $10,000 in reserves do we still set aside 10-30% of the rental income for these expenses, or is there a point where reserves are built up enough and we can stop pulling that 10-30% out of our income?