Calculating these losses involves documenting the fair market value of the property before and after the disaster, adjusted for any insurance or other reimbursements.

(no banks involved)2.

Some thoughts on your situation overall:In terms of vetting, I personally there is a limit to how much you can mitigate risks when working with a smaller contractor.

Obviously, each bears certain risks, and usually the agent would advise on these topics in the beginning.

I would get an attorney or title company involved to create your loan documents to ensure they comply with the law and cover all the aspects you need.Another method that is likely your best bet to take on investors is to create a joint venture (JV).

I am excited to get involved and meet all you awesome people! 

Having dual licenses, loan origination and real estate, has got me involved in most parts of the investment transaction.  

Risk Management:Every investment has risks, and real estate is no different.

This will reduce your risk and cash invested and if something goes wrong you wont be bled dry with never ending repairs.

Is that amount worth risking at this time potentially having to pay from your primary residence?