You still need some money to cover part of the rehab until you get your first draw, and if you're a brand new investor you might not qualify for 100% LTC on your first deal, but if you can partner with someone with experience on their track record or can prove significant past contractor experience then we might go that high on your first deal. 

She can cover the difference so you break even and you split the equity, etc. 

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.

Wouldn't the Note would have to sell for nearly 100% to cover the Due On Sale?

How much of a credit do they offer at closing to cover the servicing fee?

This would apply to your unit.Your biggest concern with setting the rent should be the near future. 1) Your insurance is guaranteed to go up, probably dramatically.  2) You may get an insurance assessment bill to cover the CA Fair Plan losses.

The property listed for 200k, so we talked them down to 190k and they are covering 2k of down payment.

Lenders typically allow borrowing up to 80% of the home's value, which could more than cover your renovation costs.Fix-and-Flip Loan (Hard Money Loan) – If you’re planning to sell quickly, a hard money loan could be a good fit.

I still have a hard time understanding how this business model works for them, but perhaps that upfront fee covers for lack of deal flow (?) 

If you want the name of the agency we use, message me I don't think we can promote a company here that isn't a BP sponsor or Pro etc.Hope this helps.