That gives you a buffer. 

There's a reason for the high cap rates; they are riskier areas, therefore, you must have higher cashflow to buffer it.

This whole situation screams out why all investors should retain some of their earnings as a buffer for economic situations. 

Also not putting in too much buffer in your analysis. 

Just make sure the numbers make sense for your situation/goals and build in some buffers with your analysis like others in this forum have said. 

Just because youre approved doesnt mean that you have to use the total approval amount, but it also provides a bit of a buffer incase you run into a situation that may require the additional approval amount (ie.

Gross Rent > mortgage p&I + ptax+insurance +200$ buffer for vac/maintenance. 

right you are @Huong Luu. it doesn't have any buffer

One unexpected call like this can wipe out your cash flow for an entire year if you're into the wrong deal, and you don't have proper buffers budgeted in your numbers from the start.Bottom line, run your numbers conservatively and get into the right deal.

In a market where appreciation is expected to be stronger I think it is ok to accept lower cashflow but I would never go cashflow negative and I think you should always have some buffer built in so that if rents go down (yes it does happen sometimes) you're still cashflow positive