There’s no risk and all reward because if somebody can’t provide ID, they’re not going to be able to rent from me anyway.  

@Chris Kay it depends what level of renovation you are doing!

Loans like this can be useful or very dangerous, depending on how you manage your business.The ideal situation for a loan like this is when you have a property that will take a while to get up and running. 

We rent it in between $75-125/night, depending on the time of year.

Quote from @Roger D Jones: SamEveryone here is providing great points to consider and if you were my son I would say that at 360k this 'dog needs to get put down'. 

Answers to the other questions depend on a lot of factors, and the temperature of the market as we head into presumably tough times. 

For me personally, our STR and our little inn provide more than half my family's income so I feel I have a fiduciary duty to my wife and kids to maximize that. 

I would start with them.I am not based in LA, so I don't know your exact laws, but I think I can still provide some initial direction for you to find answers, and maybe offer an idea to research.  

American Family recently discontinued their multi-family coverage, leaving many property owners scrambling to find new providers.

And that's how it can work to provide more then amply assignments, via public/private partnerships.