We look at the operator's liquidity beyond the loan (are they sinking their last dime on the project or do they have assets to fall back on).

Therefore, even if allowed in your state, update your lease to specify that this payment is considered "pre-paid rent," not a security deposit (which has cap/restrictive laws separate from those mentioned).

They may have options that would provide coverage with conditions, maybe restricted water loss payouts, higher deductibles, or require water shut-off devices installed. 

They have some of the lowest fees out there, its a perpetual investment, offers liquidity, the ability to pull out your cost basis tax free, and the distribution rates in their I share REITs are paying about 6.3-6.8%.  

That brings me to your current liquidity.

Also, many builders in our area had restrictions on rentals, but I am building some relationships with 3 or 4 new builders that want to work with investors like you. 

Liquidity is good.  

Hire good contractors and have liquidated damage clauses in the agreements.

I do plan on growing the RE portfolio and want to make sure the next moves are savvy.We have decent 401ks, and limited liquid funds in savings...Thank you for your timeNo, you don't!

I don't understand your direction of things @Jobby JohnGiven your focus, wouldn't it make a lot more sense to go out and hunt for GC's who have investing desires, but lack the liquidity.