I know a lien or unexpected issue could hinder selling the property quickly or add additional costs.

Were there any unexpected hiccups?

Sure in theory the owner just signs a piece of paper saying you can take over ownership and he'll just up and walk away, as long as you pinky promise to pay the mortgage every month, but I guarantee you that there will be more unexpected hurdles coming. 

You'll want the reserve because like I said, you may have unexpected costs come up that your not planning for. 

With the best strategies int he world you often need to pay an attorney or something else unexpected out of pocket.

And as a note - do not be blind to unexpected things either - keep plenty of cash reserves, only use long-term debt (forget 6 month loans, unless you know what you are doing!!!)

As soon as we bought it, we did a few minor upgrades and replaced AC (unexpected expense).Within a year of being there she had our first kid and got pregnant again shortly after that.

That would slow me down quite a bit and cost a lot if I needed to make 100 offers to close on one.Do you just estimate an "average" cost for those items and if something unexpected comes up during the inspection, would you just renegotiate the deal (making use of the inspection contingency in your offer)?

There are always unexpected things that happen with remodels, I have not heard of one flip that was finished on time and on budget.  

What you are saying is assuming that everything looks and good does not consider any vacancy, especially unexpected vacancy and that the future times are going to be perfect.