I'm a relatively new RE investor, and new to the BP community as well.

A standard demonstration related to this is dropping a chunk of concrete into water -- it will bubble for a pretty long time as it takes on water, then when you take it out the reverse occurs.Can't really tell -- are you saying this is new construction?  

There are no financial compliance issues with financing from related family.There are financing issues when you finance to an unrelated owner occupied party, Dodd-Frank is not the only issue.

I live in the Phoenix area and I've been looking for a 2-4 unit property here with the intentions of buying it through FHA and living in it for a year or two and then moving out.I'm running in to a number of problems:1) There are not many 2-4 unit properties in the Phoenix area relative to areas like the midwest and/or east coast and for the most part the multi-family homes here seem to be located in less than desirable areas. 2) It seems to be very difficult to find one that will cash flow.

I think the umbrella is a relative bargain (and as you note probably lower risk for insurer as the underlying coverage may handle many claims) for the price (I use  RLI, and maybe your solution is as simple as a lower cost provider)...In my very short time seeing inside of insurance defense, I would see the guys that worked for the major insurers (who fought claims on a daily basis) up their own policies, so that was enough for me..  

@Han Oh  yes legal fee's as they relate to the foreclosure not legal fee's to see how to do it or what the pit falls are.

I have supported Real Estate related Veteran Organizations such as Building Homes For Heroes and The Veterans Homestead Project by helping locate  properties, donating materials and volunteering my time.  

Shamim Toufighian Whether something is a good investment or not is all relative.

I am sure there are a lot of BPers who can relate to your story.Thanks for sharing and good luck with your REI activities.

The front end due diligence is the most time consuming and difficult part, but provides a relatively straightforward path to income or capital gain.