It's insured on catastrophic loss; fire, tornado, etc. 

I insure for around 75% of ACV, understanding that a catastrophic loss is unlikely; however, if it does happen, I can eat the difference. 

LLC works best if you have unrelated partners as members as it relates to liability protection.. this is what I see in the real world.. just get good insurance don't be a slum lord and again unless there is some catastrophic event and or a water landing your fine. 

Are the consequences minor or catastrophic?

A lot of positive benefit to buy a contiguous lot as described before.The negative I would see is the concentration risk: if the neighborhood goes bad or if local catastrophe (flooding, earthquakes, tornadoes, fire...) happens you loose two properties instead of one.I had the same situation a few years ago and in my case I bought the property as I self manage the properties and the convenience factor was a definite plus.

Flood events are typically whole home catastrophic level events.

I believe it tends to give me a slightly lower return, because the sponsor is going to be more careful, and if there is a severe downturn will prevent me from taking catastrophic losses.

My brother and I bought a three bedroom one bath hoarder house in Northwest Indiana with the plan of a slip to gain capital for further it and hold investing.The house has 800 sq foot of original hardwood that have ...

Reason for buying the house initially was to live in it for an indefinite number of years (and not at all to be used as a rental property), but I got offered the opportunity to move abroad for work which I couldn't decline because it was my dream.We decided to keep the house and rent it out as it was "less catastrophic" than selling it for a major loss and also because we were proud of the work we put and the result we had.Today, my cashflow is negative by 400€, the only value I'm getting is the mortgage repayment at this stage, but we're only keeping it because of its "sentimental" value, and an eventual use for our retirement.This was my first real estate investment, since then, lessons have been learned about buying and anticipating future value and cashflow, which we did with an apartment in Ireland (bought it, refurbished, lived in it, and now positive cashflow of 500€).What are your thoughts on this?

I wouldn’t consider this strategy unless I, like an insurance company, had risks spread across many properties and could somehow still get catastrophic insurance against the whole portfolio  just as insurance companies themselves do.