I don't want to put 3.5-5-10% FHA because the total monthly mortgage including property tax, and home owners insurance can be between $2200-2900 not even including utilities.We do live in southern california so housing prices are high.

I have a accepted offer on a two family in MA with knob and tube wiring, but I'm finding it difficult to locate a company for insurance.

This our first insurance claim, so I’m not sure how this goes.

Do you have actual taxes, insurance quote etc ?

Consider:  who collects on insurance if the place burns down 95% through your rehab? 

and exactly how much is needed - even if 100% construction financing, there will be interest & closing costs, insurance, plus often fronting the construction costs before the draws are disbursed, drawings/plans/permits that may not be covered by lender's loan...  3) Agree who will pay for any budget overages.

Moderate to Low Risk Areas: Zones B, C, and X -- Lower-cost flood insurance available to all property owners andrenters.

Monthly Income: 1100Expenses:•-Repairs/ Maintenance – 50•-Real Estate Taxes – 112.50 (1.2%)•-Insurance – 30•-Vacancy Costs – 83•-Capital Expenditures – 100•-Total Monthly Expenses: 375.83 Downpayment: 18000Loan Amount: 72000 (with 20,000 rehab money)•-30 Years @ 5% interest Closing Costs: 4000Total Initial Investment: 22000Monthly Mortgage: 386.51Cap Rate: 9.54%Monthly Cash Flow: 329.32ROI: 17.96%After evaluating this, if this property was in a better neighborhood with less crime, would I be naive to pursue this property?

Rent Roll 1450Motgage 496Property manager 142Vacancy 8% 114Repairs 5% 71Expenses - 200 includes Insurance and Property tax. 

Property taxes, insurance, utilities, HOA fees and loan/financing costs are some of the ones I've recently learned about.