Pretty cool stuff and I just thought I'd share some pictures and be a resource to anyone trying to do this as well.

Insurance would cover it, I would pay the deductible, and no assets would be lost.If you are in an area like San Diego where people are more likely to sue, a judge is more likely to find you guilty, and the payout is expected to be higher, you may consider an umbrella insurance policy.

So I would caution everyone to make sure the replacement cost for your improvements will realistically cover your actual replacement cost in the event of a total loss.

At this point, I would recommend having a line of credit to cover these things so you don't have money sitting in the bank doing nothing when it could be put to work.I have 33 units, no debt except for mortgages, and excellent income.

Are you looking to pay off the hard money loan, fund another investment, or cover property improvements?

Penalties of these Federal charges may include:30 years in prisonUp to $1 million in finesThey have a "statute of limitations" - (with a third "T"  ;-) of 10 years from the date of the transaction - 10 years from now, you could get a very nasty call and hopefully, you put your reserve money in a good account that grew to cover legal expenses**********************************************And the universe could blow up as Doc says in Back to the Future " But, granted, that's the worse case scenario." 

•One-year rental restrictions aren’t necessarily a dealbreaker if you can afford to cover association fees for that time or live in the unit while making upgrades.2.

The property can just about cover the refi in year one.  

It puts me in a position of barely being able to cover expenses.

It can still qualify if it's a fixer-upper, as long as the rental income from the property can cover the debt service.