The purpose of reserves is liquidity, so if you can get access to a HELOC you can use that instead of the cash reserves. 

I work for a Hard Money Lender, and had a client ask once how he might be able to leverage an SDIRA to create more liquidity.

Is liquidation the only option, or are there lenders/PM partners who would lend with the remaining equity as collateral?  

Now, that being said:I do think we'll have a small dip in the next 5 years, but not a "liquidation sale" type of dip.

@Jim Haney - not yet - i'm at 8 properties so not quite there and with the current state of affairs I'm contemplating my next near term moves - whether to continue full steam ahead in acquisition or build up liquid funds in the interim.

@Matt Bucklaew net worth must be at least equal to the loan amount (can be combined net worth of sponsors) and post-closing liquidity of 9 months worth of debt service.

If the debts exceed the assets, the assets are liquidated to pay the debt off and the remaining debt will be written or charged off.

The only thing I would add to this would be a "reserves fund" box, which could be optional, that would guide the prospective investor to think about the wisdom of holding some cash or liquid-equity for the inevitable burst pipe, slab leak, electrical failure, roof replacement, $500 of new blinds, etc.   

I'm maybe overanalyzing but it's a tradeoff from liquidity/retirement vs interest rate vs income generation.Thanks for your suggestions and input!

@Pat L.Dang somebody had a discount on liquid nails lol .