Also sounds like you might not have the capital for a major improvement if you buy something that needs work?  

Also, if there is already a large spread between returns on your existing portfolio versus other properties in the same market, then it begs the question of whether your existing properties are being under-utilized somehow. 

More of policy type issue versus insurance carrier, as most insurance companies would settle the claim the same way if it was vacant.Let us know. 

From my prospective, economy of scale plays a huge role in my decision making and hence I chose commercial real estate (for example, multifamily versus single family).

Take care of the property and focus on credit improvement. 

We'll likely throw money at it once someone moves out and we need to improve it to increase rents yet again. 

Since they have been really good renters and have at times been some home improvements themselves without asking me to reimburse,  what would be considered a reasonable and fair thing to do?

There are definitely homes under 140k and would rent really well, especially older homes in their improving downtown. 

There are portfolio lenders that don’t look at your income, but look at the cash flow of the property or bank statements only versus your personal income, but you will pay a higher rate versus conventional financing.

On the other hand, investors often are the only ones putting money into renovating these properties which gradually improves neighborhoods over time.