Building new, SFH or multifamily?

[Jacob George Lada]

Hello all, I have a situation and seeking ideas/guidance.

Situation: this month I had a triplex catch fire and just learned yesterday it will be a total loss. No one injured/hurt I had just evicted the last tenants. I purchased this property in October 2019 for 260k with 25% DP. It's essentially paid down to 193-194k total since then. So since it's a total loss, I'm being sent a check for 260k plus 13k for demolition of the property and removal debris. 1k for appliance's. On my insurance coverage I was unaware of, there's a policy if I build a similar building with similar size, will add 25% of the policy which was 260,000. So I could basically either build a really nice SFH or multifamily up to 320k roughly in my understanding. Empty lot in the area sells for 50k roughly. Nice SFH sell for 330-350 in the area. Rent for 2/1 is 9-1100. 3 beds looking 12-1500. So the question is what to do? I currently own a duplex in the same area and my ultimate goal is to own multifamily and cash flow. Thanks for any input

[Andrew Hogan]

@Jacob George Lada sorry to hear of the unfortunate event. Glad you have the insurance matters figured out though.

Looking ahead, I would say that there is inherently so much more risk involved when you build rather than buy existing assets. 

The time it takes from the first shovel in the dirt until the first check in your hands is so much longer than finding a pre-existing deal. 

ESPECIALLY after the two weeks we have just had, I would be bullish about developing.

Partnering up with others you could spread that capital across hundreds of units to mitigate your risk.