Using the 50% rule (taxes, insurance, Capex, maintenance, vacancies, property-management), that should give us ~19K/month in pre-tax profits that achieves our 10k/month financial goal after-tax and adjusting for inflation.Our assumption is that building new-construction would reduce capex & maintenance the first few years. 

I would just talk to your adjuster… you aren’t going to ‘mess up your claim’ or piss anyone off by asking them about your specific question.  

The seller agreed to lower the purchase price and adjusting closing costs to avoid any wash.  

This isn’t an SEC traded investment, no liens or 1st positions, no personal guarantees on behalf of the GP, If you go back thru and show us your deal analysis versus your checklist you will probably see an investment marketed at 14% return which should have been Risk adjusted down to 8%.  

Had I gone to the city, I would have known that the house was built without a permit, and that to be able to renovate the house I would have to appear before the board of adjustment of the city.6) Most importantly, the current New Western business model does not afford new investors time to do their due diligence on a house.

The added rate adjustments of the term and IO period usually negate the benefits (or many of them). 

Plus they adjust based on sales and not for a little while i noticed.

When the adjuster finally shows up, he/she will be able to give an estimate to fix the damage and what the insurance will pay - minus the deductible.  

In a 3/2 you are going to want a king in the master bedroom.You can make some adjustments with the other 2.

Your depreciable basis at the date of conversion is the lesser of (1) Adjusted basis (cost + improvements) or (2) Fair market value.