Since this is a short-term flip, the IRS usually sees it as active income, but if your role is truly hands-off, there might be a way to treat it differently.Have you thought about how you’re structuring the deal?

Umbrella insurance is usually a very large policy of $1 million or more, extending your coverage for larger situations.

Quote from @Cameron Moore: Exactly. 15 years ago, I noticed an increase in owners using insurance to pay for a replacement roof, usually to sweeten the pot during a sale.

I've seen some lenders offer as low as 15% down on an investment property but the terms they'll impose for doing so aren't usually worth it imo. 

I've sold over 80 homes personally in the last 30 months and I'm usually within $5k of the appraisal report when I run my CMA for clients.

And usually like those improvements an ADU won't improve your property's value 1 to 1 either.

We've only had one resident fail to pay rent, and it was someone who had all the usual red flags, but she also had a sick kid. 

Also, co-living situations or top performing short-term rentals can produce a pretty high cash on cash return but again they are pretty active with a high turnover of tenants and guests unless you find someone else to manage them and then you are usually paying a good portion of the profits to the manager.But let's say that you have a job and are not interested in fixing and flipping or a high turnover type of investment and you would rather be a more passive investor.

Note this election MUST be made in the year of the dispositions.2) 1031 - There's usually no tax on gains or losses when swapping property for similar property.

Without going down a rabbit hole here and overwhelming you, there are also creative ways to buy properties without needing to get traditional lending, but these types of deals are harder to come by and usually come with more risks.