Hi, Jim in the process of closing a burned house in Modesto.

I know of so many CA investors that got burned on deals they couldn't control or fully understand. 

Just like any skill in life, learning how to manage your family's finances takes time and effort and they don't teach personal finance in school (which is beyond comprehension but that is a conversation for another post).My recommendation would be as follows:1 - Figure out your monthly burn rate (how much you spend)2 - Set aside liquid reserves equal to 6-12 months of your burn rate (more if you are self-employed, commission-based, have unstable work)3 - Contribute to 401k at least equal to the employer match4 - Research Roth IRAs and, if qualified, this may solve both investing excess funds and saving for children's education as Roth distributions can be penalty and tax free for qualified education expenses (and other qualified distributions)5 - Regarding what to invest the Roth, 401k, or a regular brokerage account in, you can learn how to come up with a diversified handful of low cost index funds (or ETFs) that are easy to purchase and manage.  

Back in the days of Machine Gun Kelly and other old-timey bank robbers, they would sometimes take the mortgage paperwork held in the vault with them while they were at it, and burn it.

In an A community the land value is high enough that if the subject property were to burn down, it would make sense to rebuild a bigger and better property.In a B community the land value should be substantial enough to rebuild the same property, in square footage and included features.In a C community the land does not support rebuilding, and the lot will remain vacant for years to come.

There is a reason Private/Hard money lenders do what they do -because they take a lot of risk and HAVE gotten burned when a Borrower has woefully underestimated the ARV of a property (for example). 

Cigarette burns: Look at the carpet, especially near furniture where people sit.

If you want out of a contract I suggest you to speak to an attorney, and ASAP before you burn through any contingency timelines.

On my last house I sold I opted to do it myself and wanted to burn the house down by the end.

Landlord type homeowner's insurance does not cover any contents, so if all of your furniture was stolen or burned in a fire you'd be out of luck, unless you have an STR supplement.Also as @Scott V. mentioned, say you rented to someone and they had a huge party at your house and caused a bunch of damage and you didn't tell the insurance company ahead of time that you were using the house for STR - I would think they would either find a way to not pay the claim or else non-renew you.