I don't know of too many commercial lenders that will accept a 28% operating budget for all expenses, they will probably run their debt-coverage test at their pro forma operating expense numbers instead.

It is good to note that there are many private flood options out there and it is a good idea to shop them all to make sure you are getting the best coverage and premium.

Richard,$3500 sound about right if you got coverage from well known carriers.

The property needs some repairs before I can rent it, and I’m in the process of having those repairs done.The insurance company is saying they need proof of a lease in the next 30 days or they will terminate the coverage.

The rate will be slightly higher or lower depending on the area and the coverage amount.

We are working with the closing's title company - they are reputable and we have an open line of communication with them, and the listing agent, seller's lawyer, and the reputable title company have told us it's clear there are no liens - to make sure we are sufficiently insured in the title insurance, to make sure the title policy has coverage without any of the liens exceptions listed on auction.com:"Most liens are removed after a foreclosure property sale, but certain liens may remain.Here are some examples:Any lien recorded on title prior in time to the foreclosing mortgage.First Mortgage (if the foreclosing mortgage is a second or third mortgage)HOA or COA assessment liens (in certain states)Mechanic’s Liens (in some states)Government liens such as state and federal tax liens, city or county liens, US Government liens.IRS liens (IRS may buy the property within 120 days after sale at the price paid at foreclosure sale)Code Enforcement Liens, Environmental Liens, and Utility LiensChild Support Liens"Is this the right approach for bank-owned?

You will have to balance their LTV and the cash flow coverage requirements (DSC).The key is income.

Debt Service Ratio or debt service coverage is your mortgage payment divided by net operating income (NOI/ payment).  

As I am shopping for insurance, I can't help but ask myself, "what is adequate coverage for my owner occupied, 3 family home?".

They required personal finance statements and 3 years of tax returns to start as well as an analysis of the operations of the building, which came out favorably (1.66X debt service coverage, I think the target is 1.25).