Meaning no equity if there was a correction in the time you lived there to act as a buffer, and negative cashflow if you have to rent it out to avoid selling at a loss.

Vicky Robins mentions this in "YMOYL" - everyone's number starts at a million and just escalates from there, mostly because there's no real concrete idea what the money is needed for, so a very healthy buffer is required. 

I figure if I plan for 2-3X what I really think I will need, that gives me some buffer for something major.

After holding costs, bumping up the costs of the rehab for buffers, calling out the contractors for missing several key components in their contract that they didn't factor into the original numbers (maybe to make it seem like a good deal), etc. etc. etc.

Builders would build more units and developers would rehab old buildings.An increase in supply would most certainly buffer the demand.

When you find an interested seller, use your rehab knowledge to make a quick estimate of the repairs and with your ARV estimate make a cash offer based on a flipper's 70% rule (70% ARV - rehab cost including a 20% buffer).

This whole situation screams out why all investors should retain some of their earnings as a buffer for economic situations. 

I'm baking in a 10-15% buffer in home values just as a conservation standard in buy-holds Deniz.

I agree with all 3 of the points Dave makes.If I remember correctly, the point of view Dave's referring to is one of market characteristics buffering the many other risks.

I worked out some deed restrictions for the trees to provide a nice buffer between my lots and theirs but then they starting hammering we had to many lots ( even though we were within the code)  planning commission bowed to the public cut my lots by 20% my seller would not lower price and we walked  I LOST 80k on that one ( all the engineering i had to do up front)Seller was a well known doctor in town he was not happy what the neighbors did and since the property was in the county and this is Oregon..