I'm very interested in cutting my insurance expense and hassle, but with one catastrophic event I could lose $70-80k.

Barring something catastrophic (fire with no insurance, construction worker dies on your job site, etc.), the worst that can happen is that you simultaneously go over-budget on your renovations, lose tenants and fail to refinance.If you have significant cash reserves, you will be fine.

I know a home inspector (who speaks at the real estate investor club meetings) who claims he gets huge reductions for buyers by finding every tiny problem with the property and making it sound catastrophic in his report.

If the catastrophic happened, what's stopping the group from liquidating everything and closing up shop?

That preserves our "imagined" 16K profit, but add in minor catastrophes and sacrifices to the RE gods, and we're at 10K or so.  

This was a catastrophic success.

Now let's say you buy a FOURPLEX......again....not a duplex or triplex, but a Fourplex and you OWNER Occupy it.....it appears you can evict the tenants (and put your own tenants in) if they (have been living there less than 5 years, are not over 60, are not disabled, and are not catastrophically sick.In section F on page 3 of the following link it states that Just Cause Protection Applies to the following..........file:///C:/Users/bgarlington/Downloads/OAK036393%20(2).pdfA rental unit in a residential property that is divided into a maximum of three units, one of which is occupied by the owner of record as his or her principal residence.

@Jean G.To be clear, this would absolutely be viewed as a prohibited, self-dealing transaction with catastrophic consequences for your IRA.The IRS would view this as using your IRA to help facilitate the sale of a property you own personally.  

It seems to me that none of the reasons for buying Gold was for the creation of wealth rather than the preservation of of it during a catastrophic event... 

Changing our mindsets to viewing insurance as useful in catastrophic situations can help us avoid interruptions in business, money out of our pockets, and many headaches!