Best practice is to keep one or two payments in reserve from the buyers down payment for such instances.

You have to weigh the benefit of the insurance claim payment versus potentially having your carrier cancel you and perhaps get black-balled by the insurance industry.

@Isaac Hanai make sure you FULLY understand the negatives of S8 programs, not just the mirage of consistent government rent payments.

To qualify for a loan, focus on having a credit score of at least 620 (or 580 for FHA loans), keeping your total monthly debt under 43% of your income, and saving enough for a down payment and closing costs—about 5-10% of the home's price in total.

@Jordyn Ohsnot enough info to helpbut if you're using a HELOC for the down payment AND getting a loan, then you're probably negative cash flow given that's 100% leveragei would never do that unless i were going to refinance in the short term

Does a DSCR loan require 20-25% down payment?

If you offer more $ for the property than the all cash offers AND you appear to the seller to be highly qualified in the method you are using for sourcing the payment, at some point your offer will be more appealing than the all cash offers.I don't understand why you would consider a 1031 for another property in two years. 

Rentals also build equity through tenant payments and appreciation, with profits taxed at lower long-term capital gains rates when sold.

They have decent rental markets, and there are options where you could get in with a 20% down payment.

If it doesn't, can you still make the payments?