I think the water didn't cause any serious damage. 

@James Free If you don’t trust insurance companies (who will be on the hook to pay for the damages of something occurs) then ask a couple local contractors to give an estimate to scrape a half burned house off its foundation and rebuild it.

Of course, there are often other factors about a company's reputation or how their estimator bid the job that causes me to break that guideline.I know with a lot of my subs, after I've given them the job, are often quite curious as to how the other bids came in.  

Roof has damage on the inside, and crawl space has been flooded.

It would not take much of an innocent human error (overlooking some roffing/plumbing/electric problem) to eat that up quick.Taking appreciation out of the equation (cause that is educated speculatiin and I do not know your market), I dont thinking tying up the down payment is worth it.

Everything from lack of patients to work style to damage to your reputation can happen in a short period of time and cost you far more in the long run than a few thousand dollars for an emergency repair.

Please understand too that we have no issue with a service dog or our tenants having one, we were just concerned that they would have every intention of training this dog, but then grow slack on its training and ending up with just a pet, and for free, no less, in our home and causing potential damage. 

@Michael NotoAs mentioned, the real thing you want is for them to have liability insurance, not only to limit your liability exposure for injuries on the property, but, more importantly, to cover your property if they cause damage by starting a fire. 

(example 20%~25% equity) with out causing too much trouble with lender?

Out of the top 3 cities Melbourne,Sydney, Brisbane.We are going through a slow down for the first time in 27 years.1 royal commission on the banks.2 tighter in lending policy caused by regulators.