Renter's Insurance is a cheap date for the tenant; it protects their security deposit and assets. 

I would shoot him regular updates to keep him in the loop.

They are releasing permits now on a regular basis and things are able to move forward like they should.  

Are there many REITs that currently regularly engage in this type of feeder based structuring for a investors?

It’s inexpensive to provide but can make a big impact.Comfortable Bedding: Investing in high-quality mattresses, pillows, and linens improves the guest experience and leads to better reviews, which can boost occupancy rates.Smart TV or Streaming Services: Offering Netflix, Hulu, or similar services is a low-cost way to enhance guest entertainment and stay competitive.Fully Stocked Kitchen: A well-equipped kitchen with basic appliances and utensils appeals to families and long-term guests, saving them money on dining out.Dedicated Workspace: If your property caters to remote workers, adding a small desk and ergonomic chair can set your listing apart.Outdoor Spaces: If your property allows, an outdoor seating area, fire pit, or hot tub can significantly increase your nightly rate and attract more bookings.Energy-Efficient Features: Guests appreciate eco-friendly options like LED lighting, smart thermostats, or solar panels, especially in eco-conscious markets.Keyless Entry: A smart lock is a relatively small investment but offers convenience and security, which many guests value.If you’re deciding on amenities to add, it’s always a good idea to research your local market.

Assuming plans are needed to secure a permit.

I noticed that the previous owner let them pay half the security deposit and the other half later, which is a red flag.

End to end, I bought the land, secured permits, got the PPA and IA, SUP, and still own the project.

It isn't having paid off properties that offers security, there are still taxes, insurance, maintenance and management involved. 

Here security deposit and most of the first month's rent are supposed to be paid by NJ Victims of Crimes.Fast forward now:- she did not pay her rent of January.