The drawback is you need to build trust and relationships upfront.Both have their place, but private money tends to offer more flexibility, while hard money is more structured and accessible if you lack personal connections.

I personally would never invest somewhere that could outlaw rentals.

Personally, I would hang on to the cash.  

Quote from @Matthew Crivelli: Personally, I'm not a fan of Air B & B.

Personally, my primary residence has appreciated around 6% in market value and I live in Levittown. 

The challenge was balancing the relationship between landlord/tenant and a personal/friendly relationship.

The cost to repair your vehicle, and perhaps the other person's car, will be WAY MORE than the cost of the insurance premiums you saved by not having insurance. 

If you feel the need for in-person mentorship, reach out to prominent local investors and try and strike a deal to learn from them.

The flippers we personally work with in California have not run into this issue (as far as I'm aware).

Many banks limit personal loan amounts.