Pm says I can get 3.6k a month with 8% for his fee  That is a lot of negative cash flow when allocating for other expenses. $1.3m with $7.4k rent equates to a 0.57% rent ratio.  

Feeling bad for the renters who are unable to use the bathroom, fearing possible litigation (even if there is no reason to be sued, just an irrational fear)The other issue is recurrent expenses although I have allocated 20% of rental income for both properties for repairs and maintenance.

If the vacancy rate is currently 5%, should I allocate 20% for a Great Recession like event.  

It DOES account for allocations such as vacancy, Pm etc..   

Then after all that, ask yourself is it worth then money wise.I would recommend you take 60% of your allocation & buy houses cash or heavily less levered(20-40% LTV) in really good areas.

Upon further inspection, I quickly recognized that the times they were allocating for various tasks were grossly overexaggerated.

I suspect $850 would be conservative maintenance/cap ex estimate (versus $624 you currently have allocated) assuming no large deferred maintenance items. 

Make sure you allocate funds properly.

Still it's money that would be better allocated towards principle on one of my rentals.  

A 25% loss feels a lot worse than two 13% gains.End of the day, I just decided that I preferred to manage my own capital than to allocate that job to someone else.