[1]    You might want to think about opening 2 FDIC insured savings accounts that have no fees.

Explore the possibility of doing liability insurance instead, if you don't have much equity it may be your best, and much cheaper option.  

Quote from @Nicholas Dillon: I read somewhere that you can request to have your mortgage insurance dropped once your Loan to Value reaches 80%.

The above rate will either be NNN or you need to estimate insurance, property tax and utilities and deduct.  

Planned energy-efficient HVAC installations will replace outdated ceramic heaters, reducing tenant utility costs, lowering insurance premiums, and qualifying for utility reimbursement programs—a win-win for tenants and investors alike.Inflation HedgeReal estate is historically a strong hedge against inflation.

Cash flow has been hampered by an increase in cost of ownership recently, specifically insurance. 

If you are trying to get a cash out refi, I would think the bank would want to see the correct type of insurance for the business you are running.

I follow Dodd Frank, I use an RMLO, I have a title company close the sale and offer title insurance.

- Why didn't the contractor's insurance cover this?

With that being said we tend to see a lot of CA buyers relocate here for the lower cost of living including lower home values, property taxes, insurance, no state income tax, gas prices etc.