How do we take advantage of that? 

While I do maintain a relatively modest percentage of my assets in money market instruments, corporate debt funds, and high dividend stocks, I remain most comfortable with the investments I specialize in and know best.  

Offering flexibility has allowed my borrowers to swing into deals they would not have been able to do previously.

It depends how long you plan on living.

I think about this often, its really just running the numbers - if you borrow 100k at an 8% interest rate, will the investment get you more than an 8% return?

So - somewhere 2 hours away, or somewhere you like to vacation in, or where all your family lives, or where you plan to move someday.Too many people are trying to do exactly what you're doing - pick a market based on a formula - and they end up buying a random 'cheap' property thousands of miles away, turn it over to people they've never met or even spoken to, and then... lose money.  

Run your numbers based on youre required return given what youre likely to have to spend and the amount of headache, risk, and work you have to do.

It's always a little more challenging investing in out of state (I invested out of state for 15+ years) but you can still be successful doing it. 

How do you finance the tear down do you add it to construction?

Because they know you'll probably never make a claim, or your claim won't qualify.