Anyone have any suggestions on how much home owners insurance I should carry.  

I have carried back second mortgages for sellers, and so I always ask for owner financing. 

They do not take into account other costs like insurance, carry costs, cost of time, opportunity costs...They always undervalue my time and expertise finding the right project and the money to do it, working weekends holidays and nights. 

For multi-family 5+ you get a commercial loan, the eligibility of the loan is mostly based on the income the property generates and if it can carry it self after the bank runs their calculators and cost assumptions.

Don't forget you have carrying costs, realtor costs and taxes as well.If the seller is in foreclosure or behind on payments there is a very specific path to take.

(She prefers a small house, has minimal income and 50k in savings)The Deal: Owner carry for 135k, with 28k down @5% with a balloon in 15.

They used to carry rental insurance, but they did not renew the policy last year.

I found 2 owners that were willing to carry the financing.

@Patricia Steiner of course I have looked for sellers willing to carry the financing.

Now how much of that passive loss, if any, can be used to offset other income will depend on A) if they are a 'real estate professional' B) if their not a REP if they have an AGI, adjusted gross income of less than $150,000 (which is pretty unlikely in our scenario if they invested $100K)That passive loss will be carried forward into future tax years, if it is not utilized in the current year.