Tompros even had some media coverage on the case.

It also boosts the liability coverage on the property. 

Lol Seriously though, I have good cash flow coverage and the increased rents since I bought (even unfurnished) are in line with the increased leverage.

And (brokers can correct me if not) some E&O policies have clauses relating to self dealing coverage.

When you are looking into your new insurance policy ask each company if the liability coverage of the policy if the tenants dog bites someone.

You want at least a 30% margin above costs and the NOI needs to be enough to pay the debt service after stabilization and then some.If the project looks feasible from a financial standpoint the next step is to check with the city or county planning and zoning department to get an idea if your concept will work, if you can build what you would like to build and what is required for all approvals including site plan, building permits, proffers, water/sewer tap fees, bonding requirements, inspections, setbacks, lot coverages, parking requirements, height restrictions, C/O process and time frame for all approvals.You also need to check with the utility companies and get an idea of availability and cost estimates from them for water, sewer, power, gas, cable, installation and connection requirements, tap fees, hookup charges, transformer location and relocation, power line and power pole relocation issues.

For my CA people, do you carry earthquake coverage?

*I am NOT an attorney NOR should this be considered legal advice*What ever you decide on - take action ASAP - don't just let it sit there.Chances are you bought a landlord policy that will not cover the place if a loss occurs while vacant (unoccupied) so you should probably have a chat with your insurance agent to make sure you have proper coverage too.

Another good ratio for quick analysis is the Debt Coverage Ratio (DCR) used by lenders.

What should scare you is if your debt service coverage ratio drops below 1 for your combined real estate debt versus your total NOI.