You will truly be raising the clock, as each day will cost you very significant money.  12% interest on $250k is $2500/mo, or about $80 per day in interest, not including your other carrying costs (utilities, property taxes, insurance, HOA). 

I want to escrow taxes insurance and sewer.

Do you think First Insurance will, insure in a high fire risk locale? 

The DSCR program "Must use the lesser of the two either common rent from the appraiser 1007 rent schedule form on the appraisal or the lease".You also have to factor in the taxes and insurance because a guesstimate or ball park can kill the approval. 

However, due to rising insurance and tax costs, I'm starting to feel the financial pinch as the tenant currently pays rent 60% below the market average.My long-term goal is to acquire more properties, and I've considered doing a cash-out refinance to access equity for reinvestment.

In addition, 1031 Exchange Qualified Intermediaries are generally not required to be bonded, insured or maintain any other form of minimum equity capitalization.

I don't think the insurance is very expensive.  

For instance, depending on your location insurance costs could be much much higher than indicated in the book, construction costs are a lot higher, etc. 

Your insurance company might want to look at the property. 

what is damage protection insurance?