How much reserve?

Review your contract to see if they have a mark up, I feel like they are charging for the repair and then a mark up, the contract would confirm this. 

.,) and/or extended vacancies (tenant moves in a bad time of year, turning the unit is slow, etc.) will wipe out your reserves.

Oh one last thing i forgot to mentioned, the reserves will be coming from my 401k.

The main caution here would be, you can't get to your rental in short notice, or cheaply, so you'll have to rely on / trust others to manage your asset, this can be hard for many people to do.The Jersey Shore isn't a bad one, lots of demand, its not a year-round market, but you can make your entire nut renting it out in the peak summer months, then use it for much of the spring/fall, and reserve a couple weeks during the summer as well.

This was confirmed by the ex-PM, yet she is trying to argue (without receipt of course) that she paid the whole thing.

Is that enough to cover insurance, hot water, maintenance/repairs and reserves for capital expenditures?

Have a reserve and cover yourself.

Financing & Deal Structure: Purchase Price: $1,550,000Bank Financing: $1,162,500 of Purchase Price at closing Financed by: South Shore BankInterest: 5.46 %Points: 0.75 PtsInterest Reserves: $60,000Closing Costs: $23,000Terms: 25 Year Amortization 10 Year term.5 Year fixed.Down Payment at Closing: $400,000 Private Investor + Own CashActual Rehab Cost: $385,000Summary: Purchase Price: $1,550,000Rehab: $385,000ARV 3 Unit: $2,000,000ARV 4 Unit: $2,400,000 Appraised values came in at $2,300,000 for 4 unit with lower rent roll projections given.Equity Created: $500k+Projected Monthly Rent Roll: $15,500/monthProjected Monthly Cashflow: $2,328/monthProjected CAP Rate: 

This is why you should always have cash reserves or line of credit to cover shortfall issues.