For example the property throws off great cash flow and has been stable for years but all of a sudden the property needs 50,000 injection due to an unforeseen larger repair.

We ran into a number of issues including permitting challenges, contractor disagreements and of course, additional unforeseen rehab requirements that drove our budget up.

Our contractor quoted us 18k in labor plus any unforeseen labor which will put us up to about 20k labor only.

On a $200,000 investment, you put down $40,000 and retain the additional 5% or $10,000 as a reserve to cover unforeseen issues that almost always pop up.

Water and sewer taps need to be researched before buying a lot, we had to go under a road to connect sewer taps which added unforeseen costs.

@Scott Young  The rehab began October 1 and we had a target December 1 completion date that turned into a mid-January due to a few unforeseen delays - permitting and inspections primarily and a few that I should've foreseen and didn't, but hopefully learned some lessons.  

As opposed to "assigning" each investor a deal, if everyone was equal in multiple deals this would insulate them from an unforeseen lower return.

Some lenders will want to see a reasonable amount of reserves to cover unforeseen expenses, particularly on a rehab property.5.

Reserves can be in cash or liquid assets as well as the ability to borrow short term for unforeseen occurrences, like the HVAC breaking down or the deductible on any insured loss along with loss of rents.Search threads here on the "rules" 2% and 50% but look to your market rents and expected Cap Rates.

What you don't want to do is get yourself so tight that if some unforeseen thing happens it starts the snowball rolling that destroys everything you've worked to build up.