The Homeowners Insurance will include Builder's Risk. 

If it is someone you know you can give them a straight return as if its a loan - can provide a lower interest rate to provide upside - it really depends on the lender and what are they concerned with and what is their risk profile. 

In SubTo, the bigger risk is on the seller.

As more people placed more properties in STR inventory, and as more municipalities taxed and regulated the industry, the profitability of the overall industry has reverted to a much more aligned (lower) risk adjusted return.  

Even trusting a brand new GC who's licensed/"qualified" is a risk from out of state, let alone out of country.

My current situation is, in part, a result of playing it too safe and avoiding risk altogether.

I understand why carriers associate Condo/PUD construction with greater liability risk (I am sure being based in Philadelphia, a jury friendly city doesn't help either) but curious which carriers others are finding to price coverage without this exclusion and also price the coverage competitively.This also serves as a reminder to review the coverage when you hire a GC for more substantial or unique construction assignments. 

Starting small with duplexes or triplexes aligns perfectly with my risk tolerance.

If you have someone funding the entire deal, you have ZERO risk in the deal and get 50% of the profits - run with that.Lets look at it another way.

How would you manage risk?