I listen to the problem solving episodes for the same reasons I read forum posts.

I still made it work, but man, it was close.Has anyone else been blindsided by something in a deal like this?

Let us know if you’d like to talk further about this.

"The Millionaire Real Estate Agent" by Gary Keller teaches the same thing and is a good read.

What made you interested in investing in this type of deal?

If I am understanding this correctly the $175K is the equity amount the lender supplying the construction debt requires so I am guessing this is a roughly $900K total cost project. 

I appreciate any assistance with this matter. 

Half of the PM's down here can't read contracts, don't know how to inspect a property for damage, etc. - they just use whatever contractor is giving them the most free stuff at the time.  

Any advice on some additional improvements that could be done to potentially fix this problem without having to buy a new water heater?

@Dan Brewer as I'm sure you're well aware, people aren't in this because they don't understand it.