Biggest challenge I've come across, I'd love some feedback...

[Krista Patrick]

Hopefully I don't get too far into the weeds explaining my dilemma that I lose you, but I'm hoping someone has some expertise they are willing to share.

Long story short, my background is community and economic development. I grew up in a family of RE developers. My husband is in construction and has managed the build of almost 200 units (some currently underway). We've bought, sold, house hacked (mostly cosmetic or adding a room renos), and have been landlords and pm's. All this to say, I'm not completely novice but definitely not an expert and I've never done a massive renovation.

Recently we purchased a parcel (I'll call it land A) to build a SFH but after a lot of unfortunate incidents we pulled the plug and still carried the debt. (The land was crap, which we didn't know in the beginning despite doing "everything right" and hiring geotechnical engineers, getting samples, etc.) Currently the land is listed for sell at a massive loss. But it's ready to go for the next person to have an amazing deal.

This was our first big loss so I'm counting my blessings. However, around the same we also got the opportunity to purchase another 10 acres well under appraisal. Let's call this one land B. The bank we were using for the failed project financed the Land B because there was enough equity to cover Land A, Land B, and the loss. It wasn't an ideal situation but we've never experienced this before so sometimes you do what you gotta do. 

Now we have one loan with both properties tied up. The loan amount is about 485K and the appraised value for the combined properties is around 640K. 

The issue we have now is that Land B included a house needing massive renovations. We haven't been able to get an insurance company to provide insurance on the home because it needs so much work. We recently got a letter from the mortgage company reminding us that they can foreclose on our property (and take both) if we don't carry insurance. They knew the condition when we purchased, but thought Land A would sell faster because we had done so much work to it and were selling it so cheap. Spoiler alert, no one wants to purchase and build with a 9.5% construction loan.

Our thought on this is to get a builders risk policy for Land B and start the reno. Unfortunately all our funds are tied up in other projects and these two properties. Now I have to figure out how to fund the reno for Land B.

Based on recent comps and the reno we have planned, we believe the ARV of Land B will be over 800K. (A home a block away recently sold for 725K on 2 acres. We have 10 acres and will an additional bedroom.) This should be enough to pay back a private money/hard money lender and release Land A from the property in a refinance.

Eventually we plan to build one or two additional SFH's as well as 4 STR cabins on property B as well.

If I can make the reno on Land B work and release Land A, we could potentially resume the build on Land A. At that point the land would be owned with no debt and it would cost approx. $592,250 to finish the project. The homes on either side were recently appraised at over 1M. 

I've never tied properties up together, never experienced a massive project loss, and I've also never had to use private money/hard money to fund a project. 

After reading all this, does anyone have any advice on what I should do next? Does my plan sound achievable? I'll take any advice I can get. This one has my brain spinning. 

Thank you!