I do maintain a sufficient cash reserve to satisfy Lenders.I like using this strategy for several reasons.1. 

Unsecured borrowed funds cannot be used for down payment, closing costs, reserves, or anything.Secured borrowed funds, however, can be. 

I'll be paying cash for the house at $35,000 or financing $25,000 at 6% for 15 years(around $350 per month with taxes and insurance).eI'll have to spend about $5,000 to furnish it.Revenue$1,000 per monthExpenses$350 - mortgage$100 - replacement reserves$200 - vacancyWhat are some red flags you are seeing that maybe I haven't considered?

Ideally I would recommend having enough cash on hand for 6 months payment reserves plus enough for your down payment and closing costs?

I am trying to focus on building wealth thru a rental portfolio and this strategy seems to be a good choice to me just because I don't have big reserves to buy cash and I think I can get people that have very good interest on their mortgages.

However, since I have a bunch of units through there we just agreed on a "reserve fund" that she keeps topped up and I get the balance (at the end of the month minus the reserve balance).

It is an amount you should dedicate to reserves.  

I think I will focus on wholesaling and build a cash reserve.

I can also just do nothing to do it, take the cashflow it has now and wait a year or so to build up reserves.

Making well informed choices and having reserves for when things don't go as plan is how you mitigate risk.