They ended up more on the levered home trading and maybe thought they could drift into the market marking, but at the end of the day their other lines of business provided a better risk adjusted return.  

@Julie FlynnAs everyone mentioned, a commercial or private loan would be your best bet.

and if you've done anything to adjust your strategy for the next coming year?.

Now that you have some experience, I bet you could find a private lender to give you better terms on your next deal.

If they do that can result in a drastically lower appraisal due to CAP rate adjustment...anybody with experience with this?

Or consider an attorney if you have concerns.But this seller is only looking out for their own interests, you can bet on that.

For you to disregard anyone who dares to disagree with your plan is at best foolish.....Having said that, I think it's a cool idea, but I'd bet it will cost far more than you have budgeted.

@Wendy Busa the price has to be adjusted to account for the unknown.

If that is the case, the problem is that sooner, rather than later, they are not going to be working and you've shown a willingness to file claims.Your best bet is to find a non-admitted / surplus lines carrier that will accept this type of risk.

Cost segregations are best for larger multi family and commercial properties.Sounds like you developed a ton of equity in this deal so your best bet is a cash out refi.