have a borrower who doesn't have insurance and is way behind on payments.

We also didn't have her get rental insurance when she moved in but what difference would that make if we had her get that?

Hence, the restrictions (valid IMO) in place (always paying mortgage insurance) will not be optimal if you make an above-average salary. 

Roofing contractors I've talked to also do not like wood shake as they state that insurance companies don't like it due to the fire hazard. 

So what do you all see to be the average cost of insurance and and vacancies in the area?

It's a bit of an art to pick out all of the items that are applicable and to make sure that you both get them all and also don't include something you aren't supposed to.For example, a monthly HOA fee would not be included in basis, but a paperwork transfer fee from the HOA would.You can also include title insurance, but not the liability insurance.  

Look into an Umbrella Insurance Policy @Grant Bublitz.

I get an email with a picture when camera detects motion.I might be able to get a discount on my insurance for the security cameras but I haven't pursued that yet.

You might spend that, or more, just getting your license, keeping your errors & omissions insurance, paying office costs, etc. 

Which makes sense if you have three large apartment complexes, because they each represent a large sum of equity and risk exposure.Be sure you run a responsible business, maintain your properties well and make sure they are code compliant, get good insurance and an umbrella policy on top.