$25K is not enough, in my opinion, to insure a solid reserve fund.

Purchase price: $125,000 (assuming offer is accepted)Down payment: $25,000 (20%)Financing: 30 yr @ 5% = $540 /moInitial rehab: $5,000Closing cost: $2,0001st yr Insurance: $1440Taxes: $120 /moInsurance: $120 /moVacancy: $150 /mo (8%)Maint/Cap-Ex: $270 /mo (15%)TOTAL EXPENSES: $1200Rent: $450 /unitTOTAL INCOME: $1800Cashflow: $600 /moCash on Cash: 21.5%Here is a link to the listing if it may provide more insight:Quadplex ListingThe unit is located on a decent street in a very small town (<10,000).

I would additionally have enough to cover 6 months of mortgage payments (including tax and insurance).   

And I believe you about how hardy folks are over there, I have family in Holiday, they are also fortunate and doing their best to help out those who waiting for their life to get back to normal.  

Your life is not worth the cost to stay.

Also I was able to get homeowners insurance to cover the outside of my section of the building in case something happens. 

There are not too many people who are a nerd like me and would like to build a map and list of all the people who signed up for Life Alert recently! 

Seems to me that if your sales contract says that you are to receive the security deposit then you are entitled to an amount equal to what the leases state, if they say that an amount was collected and he did not collect then shame on him, if the leases say that $0 security deposit was collected then shame on you for not catching it move on with life.

But I keep hearing people telling me not to rent out a property with a swimming pool because of insurance/liability issues.If I intend to insure it fully, am I still gonna run into problems?

Interesting transactions are the story of my life.