Not sure what neighborhood you're in, but it sounds like it's a class C/D property, which will naturally have a harder time attracting tenants that will (a) pay on time, (b) maintain your property, and (c) stay for long periods (which matters in the long run). 

You often can’t count the rental income to offset the cash-out loan until you have been receiving rent for a period of time…often 1-2 years.  

What I would do is make sure you have a good long period to get a contractor in and you can pull out if gets to high.  

I claimed about $30,000 in depreciation on my tax return during the rental period.

Then use Airbnb profits to pay off any remaining investments over a short-term period (3-5 years)Take out a separate mortgage and buy the family out?

I know the home insurance has gone up in the last few years due to weather, but didn't expect it to go up this much.... our estimate was $2200 for home insurance, and it seems like it has gone over that .... we are also out of option period so we probably cannot back out of it now ... 

The plans and specifications for the improvements must be itemized along with an estimate for how long the construction period will last.

For the 10 year period spanning June 2014 through June 2024, single-family prices in Austin nearly doubled, yielding an annualized appreciation rate of ~9.3% in that period.A 30-year fixed rate mortgage is sitting around 6.85% interest.

@Tonia Butler KinseyLet her out of the lease but have the same notice period of 30 days etc.

The builder is unwilling to take the responsibilities of the damage as the warranty period has expired and mentioned that they obtained all approvals including 3rd party inspection before closing.