Opinions on Opportunity: Build or Wait?

[Karl Augustus]

Hey everyone. Interesting opportunity here. On our existing property, we have 2 running units, a 2Bd 1Ba, and a 3Bd 2 Ba, and the property has potential for additional units, and I'm faced with the dilemma of if we should rehab what is there to get to 4 units, or build 6 additional units, demo 1 and rehab 1 on the property (Zoning is already figured out) to get to 9.  The other option is to finish to 4 immediately, and wait and build the others later. 

Our current cash in the property is about 80K, and we could likely get to 4 units with 20-25K in construction. 

NET cash flow around 1350-1500/mo

Building the 6 units from our best estimates would cost somewhere in the neighborhood of 1-1.2 MM, but with interest rates where they are for financing the construction, our  our NET cash flow would be lower in the short term, but our equity and long term income would skyrocket, especially with local cap rates continuing.  

The other consideration is that building the additional units would move us from a 1-4 unit designation into a "commercial" designation, making financing more difficult/ finding a buyer if we decide to sell more difficult etc. 

Opinions? Thoughts? Experiences?