Is there a way to protect myself and recoup any of my equity  (downpayment and any construction I plan to do) if the property by chance forecloses? 

A guy with some discipline, ambition and planning is going to make a great living going forward.

If you don't want to occupy, there are other options that look at the income potential of the property and do NOT factor in your income, employment history or DTI but you'll have a significantly higher minimum down payment - plan on 20% to be safe.

I plan to upgrade to 2 bathrooms after the cash out refinance.

I think my plan would be to stay on that course, not necessarily with multi units though. 

People literally believe this and plan their lives and investment approaches around it. 

Or maybe you're talking about basement drainage storm water/rain water only and you're saying there is a floor drain in the basement which is backing up?

If I can get from point A (drawing up plans) to point B (finishing the build and renting the cabin as an STR) I know that this thing will be a cash producing monster with a fantastic ROI.

My plan is to buy 1 STR and 1 LTR. 

Establish your objectives and adjust your investing plan accordingly.