If a storm happens immediately after you replace the roof, the actual cash value is the same as replacement cost, so you've lost nothing.The only thing you would have to worry about are items you did not intend to repair

I just bought a $400k STR and the break even point with 25% down is $54k with a 2% sinking fund and 3% maintenance built in. 

Unless you know of a house built with no living/dining room and the basement all chopped up into rooms about 100 sq ft! 

Gifting equity in a house may be more trouble than it is worth if you are not near the life-time exclusion1) Potentially having to get the property appraised everytime an equity is gifted2) Having a title company update the title every time3) Exemption of the gift tax return is normally for cash gifts below the annual gift tax exclusion, you may still need to file if you gift non-cash4) If there is partial ownership over several years, having to properly pro-rate certain items such as real estate taxes, mortgage interest and rental income if the property is a rentalBest of luck 

My property is in 5th ward but in a more gentrified area with several new builds on the street that are occupied and 4 more being built on the street that are all for sale.

Apply for a dimensional variance on the vacant lot to allow a smaller lot and/or setback so it can be built upon.Your best first steps are to sketch a plan, possibly with an engineer's help, then contact the zoning department to discuss your idea with them to get informal feedback on your liklihood of success before you spend a lot of money.

I found a single family home built in 2004 for $240,000 and believe I can get 20% down within 12 months.

You can hear real-world examples of how others have built their investment portfolio and (hopefully) learn to avoid their mistakes.4.

WOW.. 40k plus deposits on a home to be built.. ??? 

Illinois--Single family house 360k asking- built-1920s-told that it will need repairs.