The PLRs and Risks are discussed below.

There is extreme risk for the developer and future homeowners.

I am left to wonder, though some investors with SFR's are doing it successfully, is the risk too high for the reward?

#3 Sell and invest elsewhere.Condos add risk. 

A growing number of homeowners nationwide are being dropped by insurance companies as firms and regulators struggle to deal with the unpredictable and costly risks of climate disasters.Nonrenewal notices surged by nearly 30 percent from 2018 to 2022 to more than 620,000 a year, according to a Treasury report released Thursday that examined 246 million policies nationwide.

Various legal setups can  mitigate a large part of this risk.  

Borrowing against securities is a high risk proposition.

Because they perceive risk.

Maybe I'm no longer a low risk bond investor, maybe I'm parking my money in $VOO instead, CRE REITs, or perhaps higher risk higher return bonds. 

Speak with lenders - and consider that although they might agree they could lend to you today - they might not be able to when you need the loan.Unless the existing debt has no due-on-sale provision, there will always be a risk of the underlying loan being called.If it were to be called due:1.