I'm assuming they didn't get the proper permits to do this,therefore; I'm a bit leery into pursing this as I don't want any complication arising from renting out the first floor as an apartment and maybe having a neighbor or whoever turn me in.

They accept the responsibility of repairing items as they come up that are under $100 or for anything they may have caused, however they do not want to pay for repairs that arise and are out of their control.I hope I covered all the aspects that would help any of you with giving us guidance in this decision. 

Courts often look to the reasonableness of the required work, the aesthetic damage that would be caused, and whether the policyholder had a reasonable expectation the contract would provide for replacement of the undamaged property.Here is a link to a nice article from Property Casualty 360, a popular magazine in the insurance industry.http://www.propertycasualty360.com/2012/04/25/the-...Before looking into a Public Adjuster, who will charge 10-15% of the total claim payout, you should turn to your insurance agent for help.  

Next summer I'm looking at taping equity in my houses and sitting on the cash waiting like I did last time, for the right buying opportunity to arise...

It is very popular as it is well-priced, sturdy and well-made.

When more issues arise later, imo, they could easily cry FRAUD.I would rent it out and reap the cash flow.

But you have to be willing to analyze your fears, rank them by probability, and come up with strategies to handle them if they arise. 

It wouldn't take much more of a rise to cause some folks to want to back out of deals and for cap rates to widen.

I was wondering if there are any sites that are useful for analyzing if a specific area or neighborhood in a town is popular/desirable?

Fake friendships through social media are getting popular nowadays.