If you want to hedge yourself against this extreme possibility, have both savings and a HELOC.

@Joseph PuglieseIf your business is accrual basis and previously accrued the revenue and included it in taxable income, yes you could write off the bad debts.If cash basis, you don't get to write off revenue you never received as you never were taxed on it in the first place.There are extremely limited exceptions to this, particularly if you're cash basis and recognized the revenue under constructive receipt, however I suspect your fact pattern is not that complicated.You can deduct your normal operating expenses of the rental.Your CPA is best equipped to help you deal with this.

@Sam Shueh I would agree that granite is a better option here...it has become extremely cheap.

This question/concern has been on my mind for a while and I have been doing lots of reading hoping I can find an answer before I came to you all with it.

Here's a list of what's included with this home:New drywall & insulationAsbestos abatementNew copper plumbingNew air conditioning, and FurnaceNew recessed lighting throughout New bathrooms (two bathrooms)New kitchen cabinetsTankless water heaterNew garage door New roofHard-wood flooring ceramic tileNew granite kitchen cabinetsUpdated Fireplace in the living roomNew interior and exterior paintI'm no expert but this seems extremely high.

I am also concerned for the reason as to why this has not sold yet.

@Michael AblanI’m concerned about the age of the dog, too.

I am not sure if I need to be overly concerned with this or not? 

Part of my concern if for some reason the inspection comes back with something that will increase my rehab costs, would I be able to walk away from the deal as well?

You seem to still be doing extremely well for yourself, especially with the IT career you had... seems like you've applied it to the real estate world quite well!