If your mortgage rate is lower than what you could get today then completing a refi where you borrow more money at a higher interest rate and incur closing costs on the refi could cause the beach house to be even more negative as an investment.

Completed it and sold it.

We then provide an application to be completed and signed by anyone 18 or over that will be occupying.

Completely agree with CA risks.

If you do not have a set of specs and scope of work  with a contract than how do you know what is included and what the contractor may later claim is a change order or extra? 

@Nick Aalerud as someone who is a complete beginner to all things Real Estate this was the most profound thing that I have read thus far aimed towards beginner RE investors.

What is the future value of the property after construction is complete ? 

When I sold my rental, the disclosure wasn't that helpful for the seller as my realtor put unknown next to most things because I didn't live there and therefore didn't know their condition. in Texas, a Realtor is not allowed to complete the SDN on behalf of the Seller. 

@Samuel Coronado exactly and what happens when they change the program or reduce the assistance, you're completely at their mercy.

So, can you handle it if the property is completely destroyed by an earthquake?