How much should I keep in reserve for "unforseen" expenses?

They should go back to the lender and ask to modify the loan, because that will lower their payments...otherwise, they will always have this problem, with the rents not covering all of the expenses.   

Things slowly recovered.It was during this time I changed my personal lifestyle: I paid off my car, and cut my own living expenses to under 750 a month.

He walked us through the numbers on the expense factors and the cap rates he’d experienced.

It is more durable and slightly less expensive.

So wouldn't that make your cash flow for the first 2 properties the sum of the rent minus HOA, taxes, and %for cap expenses and vacancies?

It's not too expensive. 

Sure, Mahopac is expensive, but so what?

Much easier (but more expensive). 

Your vacancy expense could be quite significant and consume all of your profit and even get into your principal.