That is the amount of coverage you need if the property burns down or is hit by another type of natural disaster and needs to be repaired back to market value.The value is based on the type of construction like brick versus wood framed.Saving yourself a few dollars will hurt when there's a big issue.

I might be wrong here and this could be a self limiting belief, and you might be able to burn/skip this step, but it requires a different mindset, different approach and experience, and higher risk.

Make sure he has insurance in case someone gets hurt on the project or the house burns down half way through the project.

And to be honest that became a nightmare as I burned through 3-4 operations people in 2 years before getting a good one. 

What if he leaves the stove on and burns down your asset?

However, he has been burned in some of his past investments with others and swore he would never partner with anyone again. 

HoweverIf during quarterly inspections I found a hole in a door because a wheelchair backed into it, a Hole in a wall a nurse punched, a burn mark where glasses caught the sun and burned a hole in a carpet, a broken stair where an O2 tank was dropped or a chewed up molding the result is the same.

Addressing the problems is like trying to put out small individual fires in a forest that is burning.

male/female  they hit every NOD door in the 3 county metro area 2.5 million msa  this created 2 to 4 closed deals a month.. don't know how one individual could do this.. they try burn out and give up..thats pretty much how it goes.. those that buy distressed off market asset routinely have a team one person doing this while it can happen where you have a ton of low value or distressed inventory but in other markets its pretty tough going

I am also in Sacramento and had one of my Memphis houses burn down about two years ago.