If you did, then I would include the missed interest payment in the figure that you provide for payoff.If you did not get binder, then your "friend" could theoretically collect the insurance money and not pay you a dime, then you would be forced to foreclose on the burnt building to try and recover the capital. 

@Tarik Turner any national lenders or midwest lenders, who you know will do a 75% ltv w a desk appraisal?

Same reason I don't use personal capital.

Hello BP,I am finding that multi family houses are the direction I want to take in my portfolio, I do not have the capital for down payments and closing costs.

This way you don't get nickle and dimed by the contractor and bleed dry of your working capital before a single shovel has broken ground. 

I want to keep deploying capital and am in growth / acquisition mode.

Even with a manager things may arise that cause you stress and take your money.Unless lower class investing is your main focus and you have the capital and comfort level in this arena I would not do this deal. 

My overall goal is to gain enough capital from wholesaling and eventually move to "house-hacking" before my senior year arises and become a buy and hold investor with multi-Families, Commercial Properties, and sharpen my creative real estate exit strategies like subject-to, and eventually doing 1031 exchanges on future properties I own.

If your insurance covers loss of rental income that may be another source for capital during that time and may offset the cost of the hotel.If its going to take longer than a few weeks, you may offer to have them stay in another rental property if you have one available until the repairs are made.If none of the above options are available, then you may have to look at evicting because the house is not habitable and is too much of a liability.I would definitely exhaust all options to keep the tenants if they have been good tenants. 

Here's some before and after pictures of a flip we recently completed for Urban Capital Group here in Pittsburgh.