This is also spread over a large property portfolio with risk mitigation due to spread loading there cash.

What can I do to mitigate the moisture issue without breaking the bank?  

Mitigate those odds with massive due diligence. 

The seller wants to buy the home back down the road, so the tenant situation is fairly ideal as long as his income doesn't tank again (divorce and job loss are the initial hardship reasons).I'd also like to incorporate into my financing agreement something that states that non-payment of rent by the seller would result in non-payment of the mortgage, mitigating my risk in the mortgage. 

Of course, if you have the wherewithal to ride out any downturn or you understand the market extremely well to the point you know ahead of time when a market is going down then that mitigates your risk considerably, however, you are still speculating on market timing.   

If it is an area I wouldn't want to visit, I wouldn't buy there.I also get a local team set in the area realtor, PM and maintainence so I have someone to call when a problem arises.Steve I agree, you might get lucky buying out of state, sight unseen from a dependable turnkey provider, but a huge part of real estate investing is mitigating your risk through due diligence. 

My job as pilot is to understand the risk, learn about the risk, analyze the risk and mitigate the risk which is the same as a real estate investor.As I learn more about real estate my confidence has increased exponentially; in other words I am learning how to mitigate the risks associated with real estate investing.   

But it will be difficult to determine if the town will be able to continue to afford beach erosion mitigation after being hit this hard.Is this risk rising up and telling me to get out, or am I afraid to make money?

I owned a home now which is are primary occupancy, but I like some input on my creative think with out breaking the law. 

Sounds very similar to Account Closed's formula for risk mitigation.