This just seems like it puts me in a potential bad situation if something goes wrong during the process.  

Not knowing your situation, you may or may not benefit from a cost segregation study. 

My concern with declining values, increased inventory and a weaker economy would lower rental income and could potentially put me into a negative cash flow situation.

A few quick notes before I go into more detail on how I approach situations like this:- As mentioned in other replies, a 401(k) match should (almost) always be taken advantage of.

Nothing illegal about doing that, but if caught, the lender may call the loan due and if you don't correct the situation or pay the loan off, they willstart mortgage foreclosure.3) You could also go the HELOC route to tap the equity in the home, but the 12-month owner-occupancy will also apply AND the interest rate on the HELOC will fluctuate with the Fed Fund Rate.4) You could do a cashout refi as an investment property, but that will be at an interest rate 0.5-1% higher than owner-occupied rate.Suggest you meet with 2-3 lenders to explore your options about the above.Once you have access to funds, recommend you buy a 2-4 unit with 20-25% down. - You can buy owner-occupied, live in one unit, and fix up and rent the other unit(s).- If you're handy, recommend buying a property in the worst condition you can tolerate.

Assuming an only child situation where you’re not screwing a sibling.

I like this, bet on the jockey more than the horse kind of situation.

But having a 1 mil plus home with no insurance seems a tad risky given the wild fire situation. 

I'm in a similar situation....11 1/2 years in the game.  

I'm sure it was highway robbery - it certainly was based on the man-hours it took - but when you are in a desperate situation, you do what you have to do to get yourself out of it.