I have only used a couple of examples, ther may be many other ways to structure this with different tax consequences. 

Obviously, based on my relationship with the company, I'm not unbiased, but most people here on BiggerPockets know that I value my reputation above all, and when I agreed to join FTF as an advisor a couple years ago, it was because I was very impressed not only with their business model and underwriting guidelines, but with the CEO (Matt Rodak) and the rest of the management team.I have no requirement to invest my own money on the FTF platform; I do that simply because I like the platform, like the deals that are being funded and find the returns to be nearly as good as the private lending I do, but without all the overhead. 

For those that say the insurance company's job is not to pay out --- then perhaps you should go with a more reputable insurance company...Hope this bit helps. 

Remember, reputation matters.

Consequently, I find myself in a predicament where I cannot recover the funds already spent to proceed with the project.

Agreed, reputation is key! 

You should be able to find a reputable company for less.  

They are a big group and people I spoke with did say they have a great reputation, but the northeast mentality of wanting things done yesterday does not work in every market.

Consequently, I am looking into townhomes as an alternative.

actually they are handed out like candy and keep adding laws with felony as consequences. btw felony is given to anyone who judge says must spend at least 365 days in jail or 1 day in prison.