I know of a few investors who do buy and holds primarily in Denbigh with condos as their primary strategy with great success.  

I currently own a traditional long term rental sfh and a vacation cabin that we rent out as a short term rental, plus our home. 

What I mean is: even if you sell all the lots, and your primary, at market value, would you still owe your Lender money?

So, I would need to do a 3.5 percent down on the second/ new primary residence home.

Is there no way this clean up is the responsibility of the insurance carried by the person, or the immediate family, or even the person who is the primary lease holder (if not the person committing the suicide).It is insane to me that this is your financial responsibility.

@Sally Fairchild, A traditional reverse 1031 improvement exchange would be prohibitively expensive for such small amounts. 

My primary residence is paid off, and I have an open HELOC on it.

I am simply looking for general advice and feedback on experiences with this type of transaction.My situation is as follows.Purchased a SFH in May 2016 for $96,500 with an FHA loan for my primary residence.In Summer of 2018 I am looking to refinance to a conventional loan because I believe I will be at 20% equity at this point, if not I will wait a bit longer.I would like to maintain ownership of this home and rent at a rate of $1000/month.For my next property I would like to purchase a home that qualifies for 203k financing.

Your agent with experience can help you identify properties that would be a fit for a 203k loan and then guide you through the offer/transaction process which is a lot of times very different than a traditional purchase.

I am moving out of my primary residence in a few months and will rent it out.