The reason is that cheaper houses have lower upside, but certain rehab costs stay fixed (eg a $600 water heater is still $600 regardless if it is going in a $300k house or a $100k house).The 65-70% simply gives you a target profit margin and a little room for error / unexpected costs. 

Something unexpected could happen in life that causes one or both of them to need to rent.

All major moving parts and appliances in the home seem to be in working order water runs toilets flush theirs heat but no central A/C, fuse boxes with mostly 2 prong outlets.

To answer your question, you can start taking money out when you are done growing and have an adequate reserve fund for unexpected and expected capital expenditures/operating funds.

I will definitely keep that in mind, I definitely understand the risk and unexpected expenses.

I have yet to buy a building, but as I'm looking it comes down to:-buy a building that is within your comfort zone and not going to kill you if the deal goes south-underwrite conservatively, then go back and be more conservative-has to cashflow from day 1-plenty of reserves to cover the unexpected...both repairs and unexpected high vacancy-ideally LT financing, if that's not available, then even more reserves

Where possible, when I buy,  I update electrical boards if they have fuses, new wiring for extra outlets when they need more power, plumbing to insure there is good water flow,  heating if the systems need replacing or are gravity based, and roofs when needed. 

Someone can go to sears outlet or craigslist and get what they need for very little money.

In your experience what unexpected cost need to be considered?

I recommend them more just for at least the first year after you buy the property, just in case anything unexpected jumps up.