These homes then became the targets of thieves and vandals lowering values to a fraction of their original worth.If homeowners have substantial equity in their homes they are not likely to default in a small downturn, at least not until the market falls below their equity.

I think I can negotiate some of his prices down, and that will get me about 5-7K less, but that still leaves a substantial chunk of budget to get nailed down. 

When this policy has been in effect for 60 days or more, or at any time if it is a renewal with us, we may cancel:(1) If there has been a material misrepresentation of fact which if known to us would have caused us not to issue the policy; or(2) If the risk has changed substantially since the policy was issued. 

My goal is to build a substantial amount of passive income over the next 8 years in order to gain financial freedom. 

Also, putting $40k into this deal does take a substantial amount of our cash and we were hoping to acquire a second property within the next 12 months.This market does see a fair number of properties in the 8 - 12% cash on cash return so my gut is telling me to walk from the deal.  

If there is a clear value add to be done, and its being proven with a substantial number of units, or nearby properties are doing the same thing, then I'm fine with that.  

Furthermore, it would be a reasonable conclusion for a tenant, judge or tenancy tribunal to view the parking (or at least a substantial portion of it) as being dedicated to the apartment building.  

Now that you brought it up, I've been reading around and it seems like people on BiggerPockets think that, but I can't see any substantiation for it outside this website.

I am pulling the trigger on a much larger complex, though, and the depreciation expense is substantial.

Currently I own one rental SFH which received damage and substantial flooding from Hurricane IRMA.