They already lost some major players due to the state capping rates https://www.foxbusiness.com/lifestyle/california-insurance-c... will all insurance companies stop coverage, raise rates or reduce what they cover?

Of course "hoping" rates will come down is not a sound strategy so finding a way to assume a loan that already took advantage of low rates is a great option.If you were starting over and targeted a large SFH, would you try to maintain the property in a way that would still attract regular homebuyers (not investors) if you needed to sell?

While I have a fantastic rate, the co-owner's giving me the option to refinance or he'll force a sale.

You can do this as a rate and term refinance with no cash out, or a cash out refinance. 

.- in this higher rate market, i find BRRRRs to be challenging because after a high LTV refinance the units have negative cash flow.  

However, i want to address placing a tenant.My market has a low vacancy rate.  

Good occupancy and solid CAP rate.

Their lease is 6 month term with a same rate month to month however, their insurance states the rebuild of their home and fire investigation efforts are going to take 12-18 months. 

@Tom Rairdon If you’ve owned your short-term rental (STR) for over a year, it likely qualifies for long-term capital gains (LTCG) treatment, taxed at lower rates (0%-20%) compared to your 33% ordinary income bracket.

The rates are great, but you definitely have to work with someone that knows what they are doing...