One option that I heard about in one of the podcasts was to make a detailed form of a lot of possible fixes/replacements and a dollar amount next to it.

Could be 13k a door for a complete gut per unit including resurfacing small parts of a parking lot and replacing exterior windows.

It needed a new kitchen and both baths needed replaced, paint and carpet.

One of the things I made a mistake on was buying replacement windows instead of new construction windows.

If you have 20 rentals and roofs last 20 years in your area, you'll be replacing a roof every year, for example.In your case I'd consider "adequate reserves" to be about $40,000.

The seller was going to replace it.

But it was a historic home with an antique front door and antique pine hardwoods, neither of which could be adequately replaced with the insurance money.On the positive side (if you can call it that) he was able to begin the eviction process on the remaining tenants immediately.

What would happen if the furnance needed to be replaced?

With the rent vs PITI you have, you Will have negative cash flow once you factor in maintenance, repairs, major replacements, vacancies, etc.

The items need to be repaired/replaced to bring this to a C4 or better condition before we can close on it.