Tenants made promises and the Owner must carry them out. 

But, that sounds a high-risk low-reward behaviour.

If you're married and have lived in your primary 2 of the last five years, you can avoid taxes on a resale up to $500k....A HELOC on your primary will carry very favorable terms...I recently got one for 97%LTV with unbeatable terms...You'll get mixed opinions here about the option to re-fi (some people are calling this BRRRR or something like that)...If you could tell a bit more about what direction you are trying to head with your investment plan I may be able to give a more informed response. 

If one was to GC a new construction or a flip project (in NJ) would you need to take out a general contractor insurance policy or does the builders risk insurance policy on each property as well as hiring fully insured sub-contractors suffice?  

I suspect that as part of what is considered in doing a full blown appraisal, your overall risk profile and DSR (Debt Service Ratio) will be looked at.You have to be careful about your assumptions and ensure that the stuff you're adding to your portfolio is capable of producing the income where that looks favorable, especially if you don't have other earnings (or much of them). 

But I knew in the back of my mind that if her plans didn't work out, there could end up being some substantial risk for me if interest rates popped.

@Jignesh SavaliyaDoes sound like quite a bit to stomach with regards to risk as a first project. 

, carrying costs ($100K?)

When it comes to tenant profile, risk, and cash flow (or lack thereof) there is so much variety within the city that it makes your head spin. 

I think it all depends on what your risk tolerance is, and what your timeline is for how quickly you need to access the money.