At no point do you really actually keep the cash if you see this cycle, you keep some earmarked for protection.  

Other loans may be the opposite, with the money being disbursed after you have completed the task that the money is earmarked for.Many contractors would be completely fine waiting a couple days to get paid. 72 hours(48 for contractor review, 24 for funds availability) is essentially nothing in the contractor world.

The amount is not earmarked for a specific investment and ownership in a particular piece of real estate becomes a little hazy. 

This time though the profits are earmarked to long term SFR rentals.

It seems ridiculous to let that money sit in checking or savings until I need it, especially the money that is earmarked for capex!

Part of these funds has already been ear marked for renovating our house to create an Airbnb unit, which will help the financial freedom goal, but that's not the focus of this question...

The longer you let it go, the more of those reserves you are earmarking for a more costly roof replacement.

After the sale of our rental we will own our primary home free and clear, so the proceeds of our primary home will end up as investment capital as well as earmarked for our future home.

I have already earmarked several properties for you… If you’d like to have a peek, just send me your email, and I would love to chat with you more about this strategy.

Also good to be in that habit for later on when you're sharing deals with others...If you're all cash buying and you have a reserve fund to backstop any expense on the house, then in practical terms you probably won't specifically earmark any of the monthly income "vacancy", but yes, it's still "in there".