I've reached out to property managers to confirm rents in my area, but I didn't think to ask them about evictions.

Maintain reserves in the same account?

@Alan Walker, I would say it really depends on your cash reserves overall.  

Others on here will confirm.

Figured as long as it was agreed upon in a contract, it should be ok; but definitely worth confirming.  

If you have any doubts....here's the exact verbiage from Fannie Mae:B3-4.3-15, Borrowed Funds Secured by an Asset IntroductionThis topic contains information on borrowed funds secured by an asset, including:• Borrowed Funds Secured by an Asset• Secured Loans as Debt• Reducing the Asset by the Amount Borrowed• Documentation RequirementsBorrowed Funds Secured by an AssetBorrowed funds secured by an asset are an acceptable source of funds for the down payment, closing costs, and reserves, since borrowed funds secured by an asset represent a return of equity.Assets that may be used to secure funds include automobiles, artwork, collectibles, real estate, or financial assets, such as savings accounts, certificates of deposit, stocks, bonds, and 401(k) accounts.Secured Loans as DebtWhen qualifying the borrower, the lender must consider monthly payments for secured loans as a debt.If a secured loan does not require monthly payments, the lender must calculate an equivalent amount and consider that amount as a recurring debt.When loans are secured by the borrower’s financial assets, monthly payments for the loan do not have to be considered as long-term debt.Reducing the Asset by the Amount BorrowedIf the borrower uses the same financial asset as part of his or her financial reserves, the lender must reduce the value of the asset by the amount of proceeds and related fees for the secured loan.Documentation RequirementsThe lender must document the following:• the terms of the secured loan,• evidence that the party providing the secured loan is not a party to the sale, and• evidence that the funds have been transferred to the borrower

Purchase price: $188,000 Cash invested: $17,000 This is a small bungalow up in my town center commercial zone but grandfathered in as legal non-confirming residential.

You should definitely have good reserves per rental property which will help take some of the stress out of vacancies, damage, evictions etc, which do come up occasionally. 

@Wale Lawal thanks for responding, I'm not looking for anything specific other than to confirm if he is legit or not and @Patrick Prunty I'm a rookie investor working on landing my first deal in the DFW Denton market and I've talked to like 10+ hard money lenders and they all turned me down for lack of experience except this guy. 

You reserve a portion of the rents into a separate fund so you don't have to come out of pocket.