(I super simplified this not taking into account reduced interest from accelerated pay down)Example 1:Mortgage 150k (paid down additional 50k) and 50k needed for next downpayment.Monthly mortgage payment $1000 (not including taxes insurance etc)Cash left after 2nd purchase $0Example 2:Mortgage 200k, 50K needed for downpayment, 50k in reservesMonthly mortgage payment $1000 (not including taxes insurance etc)Cash left after 2nd purchase $50kWhich example looks safer?

I have purchased a Tax Cert in Alabama and have some questions on the insurance aspect.

Title insurance, various recording and delivery fees, etc. make up for the rest.By 6%, you are referring to agent commission?  

You'll run your numbers based on taxes, insurance, repairs and cap ex once you get rent rolls. 

Backed it up with a commercial insurance policy that includes a homeowners policy and $1MM general liability.

I discussed my position and explained that if everyone expected payment for an inconvenience then every tenant would insure an inconvenience every month.

My question is, do I need flood insurance in addition to my normal home insurance?  

So, if you did 50/50, you would split the monthly profits (cash flow after operating expenses and debt service) and the proceeds at sale. 

After I submitted the offer I found out that I need flood insurance.

In many ways, it's good to have strict rules in place because some owners aren't properly insuring, paying the right taxes, might not get business permits or simple things like fire extinguisher inspections.