Do you allow additions or outbuildings? 

Why is this additional?

Or alternatively if the owner walks away, and the bank decides to sell the NP'ing note ... does the insurance coverage convey with the note since the bank presumably required to be listed as additionally insured on the flood insurance policy (if the property was in the flood zone and one was required)?

@Mark SpritzWhile a Solo 401k may or may not be a better structure for you based on your situation, the additional benefits (beyond contribution limits and loans) include the following:-No custodial requirement-No need for LLC cost and admin to have checkbook control-Built in Roth-Spousal participation-UDFI exemptionsThe cost comparison depends on what providers you are looking at for each.

That is in addition to your rehab budget.

The price point is higher than our ideal range, and I needed his support to help reduce my fears.

It is just a different way of building retirement savings.If you were to cash out the plan, you will do two things that are negative right off the bat; significantly reduce the amount of capital you have to invest with through state and federal taxes as well as a 10% penalty if you are under 59 1/2 years old, and likely significantly increase your marginal tax rate on all of your income in the year in which you distribute a lump sum from your plan to yourself.

Our contractor earns 15% plus an additional 5% bonus if the property sells for 40% or more of the amount invested.

In addition, depending on where you buy the schools could be pretty well rated.  

Additionally, If this ends up in court, I would not want to try to explain to the judge (or anyone else) why I kept 6-months prepaid rent from a victim of domestic violence.