They argue that the first few years maintenance would be insignificant since the properties are renovated, and so you're essentially stashing that money away for the future maintenance needs. 

These things are supposed to be lifetime-warrantied, stainless or stainless-coated brass -- the base metal on this cheap piece of crap has just been eaten away to nothing over twenty or thirty years of city water, maybe it was reused from a previous vanity, who knows.Thankfully, I have quite a few bathroom drain assemblies that I got for free thanks to a side hustle in my materials stash, so it wasn't a big deal to replace it.

I remember back when I first dipped my toes into real estate investing...around the time I’d hoarded my first serious nest egg like a squirrel stashing acorsn...I had something close to your $80K set aside.

@Scott L. the issue with the idea of using the 10k to just pay down the principal is that then it's gone and you can never see it again - in a HELOC you can take it back if there is a need for it in the future.The next step on this ideia is that you have a HELOC as your emergency stash, so that you can always access it if there is an emergency, but you don't pay any interest if you don't and you don't have money sitting around in a checking account or under your mattress.

Do you want to "stash" the money for 5, 10 years?

They just want to stash their cash in something asset-based in America.

Regardless of the K1 being final, any time you have 1231 gains on K1, they are "gains from passive activity" and they can be offset by losses from any other passive activity, i.e. your $125k stash.3.

Lastly, if you don't need to live off the cashflow another way to solve this would be to save/stash the cashflow from the properties for the first 3-6 months in order to "build up" the reserves over time - this is, of course, assuming that there is cash flow from each property.

If your plan has both tax-deferred and Roth 401(k) components and is written to allow for in-service Roth rollovers (most do), you could roll the money you've stashed in your traditional IRA into your tax-deferred 401(k) and then do an in-service rollover, once the money is in the 401(k).

While a percentage set aside for repairs and maintenance doesn’t mean you’ll necessarily have enough stashed away for this expense it would certainly lessen the blow of the expenditure.