Or does insurance deal with all of it?

The exit strategy would be to sell or refinance after the work is completed and the property value is where it should be.  

A insurance company occupies the largest side of the building and He is the current owner of the property.

Downside on FHA is the Self Sufficiency rule where all units, taken at 75% of gross rents must at least equal the total mortgage payment including property tax, home  insurance and FHA monthly mortgage insurance.

You strategy and notions of the "deal" will change with market conditions.

@Eric Justice It’s not appropriate to speak in absolutes as everything is relative to goals and strategy.

Maybe you need to hammer down your strategy.

House hacking is a fantastic strategy in this market.

As with any business having a mission, strategy and plan with guide success.

I have taken steps to reduce the mortgage payment that may take time to go into effect: filed homestead, I plan to reappraise the property after renovations are complete to eliminate my monthly $66 paid towards PMI, and I am currently negotiating different insurance policies.