3) Given that the tenant has been paying "premiums" to the buyer on top of the monthly rent as a contribution to the down payment, I'm assuming these funds need be refunded to the tenant if he/she chooses to walk away from the deal? 

If I read this right you think if you did $5000 a unit to put in W/D and $5000 a unit in renovations you can get $100 premium a month per unit.

I do owner financing, I get a premium for the property and my interest is high. 

As of now, I am leaning towards keeping it but I just may throw it on the market at a premium and see if someone bites in this crazy market...we'll see :) 

So should I keep my insurance at rebuild value or lower the premiums to protect just the amount of money I have invested?

There would be a premium for new construction, and your realtor can help with that.If there appears to be good enough sales comps to justify new construction, the next step would be to better estimate your total costs to build (land, soft costs, permit/impact fee costs, construction costs, etc).  

I highly recommend Billy Duncan at Real Property Management Premium in Zachary, LA.

That affects your premiums.

Ann Arbor), any property zoned multifamily that's suitable for new construction is going to be sold at a steep premium.

So I am in the process of buying a multi-Family property and in the middle of the closing process my Realtor told me there is a "PREMIUM" on this property.