Tenant claims they haven't received anything from the housing authority about scheduling an inspection.    

Assuming a required rate of return of 5% (comparable to high-yield savings or a CD), the deal would need to yield a total CoC return of 10% (since everything is split 50/50).I'm stuck because while playing around with numbers, achieving this return seems improbable if not unrealistic.

I have been studying this space over the last few months and a lot of GPs rely on the ignorance of investors (about their failures, inexperience, unrealistic underwriting assumptions or their unreasonable fees) to take more people's money. 

Take photos of all damages, keep copies of all incident reports and communication records with your tenants, fire department, and insurance company.I would strongly consider working with a reputable public adjuster, especially for a claim of this size.

The proper way for the father to assert his interest in the property is to file a proof of claim in the bankruptcy. 

@Simone Montague-Jackson agree with @Charles Carillo and @Jordan Moorhead, that they aren't what the marketing hype claims.Insurance companies are in business to make money, which requires them to have a hard stance on claims and incentivizes them to deny as many claims as possible.In our opinion and 24 years of observations, it worse with warranty insurance products!

All have been returned by USPS not received although notices were left.It is my understanding these certified letters are useful in small claims court by  showing a history of notifying and requesting they trim their trees.

Claiming REPS is a red flag for auditors, so be sure you log everything in detail with your CPA from day one. 

From a financial perspective, loading up on insurance is more adventengeous than a LLC because if a claim arises, I'd rather file an insurance claim that give up the equity I built in a lawsuit.

Your profile mentions that you are a real estate agent - You want to have a conversation to see if you potentially are eligible to claim real estate professional status which would allow you to treat your rental losses as active instead of passive.Also have a conversation if you are required to make estimated tax payments since there is no withholding on your commissions.Lastly, your profile mentions you are in Florida which does not have a state income tax which opens you up to more options for choosing an accountant.