If we did a promissory note and a handshake, do you know how would the house insurance my lender requires work? 

Other concerns - I know many people don't want to be investors in houses in flood zones b/c insurance expense is so high for the investor (while it's much more affordable for a owner occupied property) - is it similar for a sinkhole? 

Regarding my second question, you're right, I think doing a title search is my next step in order to insure that their is indeed a good amount of equity.Sal

Here are the rough numbers on one of the houses, both are similar:Total investment (acquisition, remodel, carrying costs) - $200,000Current value (after netting out selling costs) - $270,000Potential Rent - $1,500/monthI can do a refi and get my $200K back out of the project, that leaves me with a mortgage payment of $1,400 including taxes and insurance (assuming 30 yrs. at 5.5%). 

Also, on flood insurance, i'm finding quotes ranging from $600/yr to $1,500/yr but not clear how that works within the different flood zones and asset types.

As a bonus, I just started a new policy this year, that anybody who buys the current year's book always get the next year's ebook at no additional charge, or the next year's hard copy book for $40. 

But things get more complicated when a lot of these people renting out their basements illegally are also not paying taxes on the income... and then theres Insurance & liabilIty Issues as well. anyways, I personally am trying to find a way to do things as legally as possible.

At $89k ask, there are $5,500 in closing costs ($1,500 of that is tax prorations) and then $2,100 in prepaids (insurance/taxes).

@William Larson Make sure your insurance policy covers your complete annual rental loss.

How did you research and evaluate those "costs" of leaving the corporate world, how did you find health insurance for you and your family, etc?