Statistically, I would bet that many of these properties could be at risk from a similar event before the reconstruction could even be completed.What is the new premium on a $5-10-20M insurance policy and how could it ever be recuperated during the life of the policy or length of the average 30 year loan? 

I realize that commercial investing is more in-line with my goals, so I have wiped my slate clean and ready to start over from the beginning.

What is your price point and are you looking for turn-key properties or something along the lines of a "fixer upper"?

Bottom line: you're not helping them by allowing them to keep digging the hole deeper AND you're cheating yourself.

For future readers, many banks will offer an unsecured line of credit up to $25k.

And what is your price point and are you looking for turn-key properties or something along the lines of a "fixer upper"?

That "pipe" is known as a Line Set. 

It may also make it easier for your estate planning attorney to line up ownership with your estate plan, assuming a CA-estate plan if a CA resident.

Sounds like he was feeding you a line of garbage. 

Your best bet would be to find a portfolio lender whose niche aligns with your investment strategy.