There is a legit chance of a loss of initial investment.  

There's a good chance the issue(s) you face has already been discussed and answered.Ask questions in the appropriate forum.

If get somebody inexperienced at a discount, you are taking a chance. 

We're willing to live almost anywhere in the greater Sacramento area based on what we can afford, provided of course that the property is in a decent neighborhood that has a good chance of attracting responsible tenants.As for budget, I believe we could get a conventional loan for properties up to $600k, but my strong preference is to find a distressed property (or seller!)

I do however think as things clean up systematically, cashflow will improve and the benefits of low capX exposure in near term and appreciation will work out.

As another poster mentioned rates are lower than they've been in the previous 18+ months but unless some very surprising economic data comes out between now and when you did your refi it seems unlikely that rates are going up in the short term and there is at least a decent chance that rates drop a little more before then. 

My belief is that you will be challenged to realize a 10% savings loan n your first effort and there is some chance it will cost more than if you used a GC.  

If there is even a small chance, I would disclose.If I remediated the water issue and confirmed it's no longer an issue, then I would not feel the need to disclose that.Talk to a Chicago attorney to get the best answer....who would ultimately be the one who would defend you in court...when in doubt, disclose, and you'll be better off.

Repairs made while the property is your primary residence are not deductible, but improvements can increase your cost basis, reducing future capital gains tax when you sell.

You risk the chance of being sued for not letting someone apply that asked.Hope this helps, feel free to reach out if you have any other questions