I let them know that if anything catastrophic happens to the rental, NONE of their stuff will be replaced under my policy.

Anything else, that's five+ months of negotiating with the neighborhood and planning department.I can't see an outcome other than catastrophe for housing affordability.

When I asked my insurance company about the high rebuild costs they said that the high rebuild estimate was based on the fact that these were older homes in established neighborhoods and if there was a catastrophe and the homes needed to be rebuilt they would be considered "custom" rebuilds which of course means higher premiums.

I had loans on properties all over the mid west at 60 to 65% LTVs and took big losses as the values dropped and everyone of those was a rental.. tenants stopped paying  it happens.. so don't think for a minute if we have a catastrophe like the GFC that rentals or cash flow is immune.. some areas it was many areas it was not.. that's a fact.   

When there was logging in the forests (I'm not talking about clear cutting), removing the dead trees and underbrush, etc. there weren't so many catastrophic fires.

As a result of a catastrophe, they may actually be considered a repair depending upon what was done and what the cost of said work was. 

Of course, the catch is that everyone always thinks that they are an above average investor, just as everyone thinks that they are an above average driver, even though this is a statistical impossibility ... but the wrecks involved in thinking you are an above average investor when you are not are far more catastrophic than they are with driving ... 

@Laith AliBy failing to carry medical insurance in the US you are making your personal risk of a catastrophic medical event a public risk.

I was hoping to build a good business relationship between our companies.This week I am working on getting my LLC started so that I can protect my assets in case of emergency or catastrophe.

Assume all options net at least 50k.1:Rehab - 100kSell house and both lots together - 300kGross 200k less purchase priceTimeframe - 1 year Risks - Over budget reno (house is in pretty poor shape)2:Demolish existing house - 20kSell lots individually @ 90k each - 180kGross 160k less purchase priceTimeframe - 6 monthsRisks - Difficulty selling vacant land (note - lot 3 doors down sold 6 months ago for 125k)3:Demolish existing house - 20kBuild spec on both lots @ 175k each - $350kSell individually @ 300k - 600kGross 230k less purchase priceTimeframe - 24 monthsRisks - Larger holding costs, over budget constructionOption number 2 is my default preference in that it's the most simple and in my mind least risky in terms of catastrophic failure.