However if you don't want to reframe portions of that wall and so forth I would simply get rid of the old stuff.

So that portion of the deal to me is not profit, it’s getting paid for services.  

I'm hearing information that rates are supposed to be cut next year as well, which will be good for the refinance portion of your project.

Instead of having a tenant pay a portion of the mortgage, I get to live here for free and the property makes me money. 

Something to keep in mind is that any initial forced equity that you might have (no guarantee of it) is a relatively small portion of the total equity that is build over a long term buy and hold.

Are there a slew of "what if", sure but you can just as easily talk to your insurance agent and increase those portions of your policy that you have concerns are not enough.

Expense ratios on the home rent portion are closer to 100% than you might think.  

@Delon Hall and @Tammy Vitale what type of experience have you had with Lima One?

the 20% is for the 1st year or any portion thereof.  

The incredient that you bring is vital.