Reserves are almost an absolute necessity!
They would be an absolute except a few people get lucky and put everything they have into a rental property and nothing goes wrong for a year or two, giving them time to build up cash reserves. Then again a few people win the lottery.
However, most people are going to see vacancies, your PM turns out to be a major disappointment, major unexpected repair work, a tenant who destroys a property and moves out in the middle of the night (especially when starting out), or sudden tax or insurance hike. There is a high probability something is going to go wrong within the first couple of years of owning a property, particularly when you don't know either how to inspect a property and/or you don't know how to properly screen tenants.
Remember, the majority of people out there can't come up with $2,000 within 30 days. If you are one of those people you need to think long and hard about becoming a landlord. Yes you might get lucky, but then again you might get lucky in Vegas.
I strongly believe that having reserves are extremely important to a buy and hold investor. Preferably, those reserves would be in a liquid bank account or other forms of liquid assets (stocks), then a CD, then a credit card with cash available on it, then pulling out of your IRA or borrowing it from someone you know who has the cash and is willing to lend you money when needed. That is a list I put together quickly and will likely tweak, but you get the idea. I'm certain there are other ways to raise some cash that you can count on as your reserves, but I very strongly believe you have to have some way available to quickly raise some cash.
I think investing in buy and hold property is an excellent idea, but it can easily be a terrible idea if you don't have reserves. I certainly hope the investors in oil dependent parts of the country have some reserves, because I believe they are in for some tough times ahead.