Rehab projects can offer significant gains, but they can also present unforeseen costs if you do not take the right precautions.

Where's the room for renovation not to mention unforeseen problems like old termite damage or an unexpected heavy up or new roof or profit:)?

I would:get a partner to go 50/50 with me or put a down payment to cover rehab and have some reserves for unforeseen circumstances and once rehabbed, then refinance.

Could there be an unforeseen drop in rents, and what would be the impact on over-leveraged investors who have 50 units which originally cash flowed $100/month, but after a rent shock sets the investor back $100/month instead?

It's a common recommendation to keep 6-12 months cash reserves to be able to cover that amount should the unforeseen happen, for example, a job loss or injury.  

., there is no protection because you are operating through a business entity) if something unforeseen happens in the deal (even though you have done nothing wrong).  

Most people seem to lose sight of the fact that insurance is meant as a hedge against unforeseen and catastrophic events.  

However I don't see either being disastrous and barring unforeseen events (trade war with China, cold war round 2, terrorism, etc.)

We typically see things come in around-basic level rehabs (kitchens, bathrooms, flooring, paint, some minor wall patching) around $30 per sq-ft-mid level (same as above but with possible roof, siding, major system upgrades, ect) at $50 per sq-ft-full rehab including above but with framing, foundation, new insulation, new drywall, doors, trim, ect around $75 per sq-ft- rebuild, additions, add a level, ect $125 per footThere is no one size fits all and no two rehabs ever go exactly the same, there are always unforeseen things you find once you start working, but that should give you a ballpark. 

Sometimes unforeseen things happen, and there has to be some flexibility in your budget for that.