If they're concerned I'll lose some or all of the account value at the same time as I default on the loan, they could roll the contribution money into an identical account at their institution where the only investment option is cash (or whatever they consider safe enough). 

I am in the last few weeks of escrow on my second sale and have a significant amount of equity since I purchased during the recession in the North bay of California’s Bay Area.The challenge for me now is to find a good deal to roll this (250k) into that cash flows and will appreciate.

Keep in mind that this is a residential property, so a higher rent roll is not going to impact the appraisal.

I imagine you could roll out the updates over time, so that you aren't facing everyone giving notice at the same time.I bought a duplex where one unit was month-to-month.

Once you get things rolling, you'll eventually realize you are living in a gold mine.

Never ceases to amaze me how often this scenario occurs.

It might give you a primer as you get rolling. its called "All Things Self Storage".

And big thing too is your money is tied up on this mistake and the deal of a lifetime happens rolls by for you and your not focused/funds tied up etc.

A 1031 exchange enables you to defer the taxable gain if you roll the proceeds from the sale into the purchase of another property using a specific procedures. 

Sure they roll it into the loan so you never see it but yes you are paying extra.