I saw that several others recommend Replacement Cost Coverage vs Actual Cash Value Coverage, however, our property value is around 55k and we most likely would not rebuild.

Get a couple quotes to rehab it and a couple quotes to rebuild.

Replacing foundations and basement re building the well.The job cost 650,000 the house was worth 350k.Four years later the soil passed the new well passed.....insurance paid 90% thank god said my seller.6 years later we sell the house.Always do a tank scan they used to just leave them or fill with sand usually people fall in them or the ground opens.When you get oil and a well.....can be double trouble costs can spiral especially if your seller has no insurance 

However, because the zoning department found out I'd like rebuild the mother-in-law suite in the back, they are purposely (and yes, I know this for a FACT) trying now to foreclose on the property, so I can't rebuild the unit in the back.

It would take me a long time to rebuild my savings just to get a little bit of cash flow.I wouldn’t want you to run into an emergency, things not go well and have the one single event stop you from building your empire!

The value was added to this home by converting what was already a "third" garage into an extra bedroom/bathroom and re-building the old attached garage and back driveway.

https://www.wlky.com/article/beecher-terrace-rebuild-taking-shape-in-louisville/30681669This will make ripples! 

Is it reasonable to think I could rebuild this home all in for $100k or less and sell for $139k?

(estimated rebuild cost).Returns:Cashflow: $3500 – ($2135 operating exspenses + $1952 P&I&PMI) = -$587/moCoC: -30.5% LOL (-$7044 yearly cashflow / investment)Investment: $23,075 = ($15,575 purchase price + $7,501 closing costs.)Closing cost estimate: $15,575 (2-5%) https://www.zillow.com/mortgage-learning/closing-costs/Closing cost calculated: $7,501 1st Year Insurance Premium: $2880 (240*12)Title Fees: $1000 (my lender says this is the max I’ll likely have to pay in Texas)Appraisal: $500 (quote from lender)Lender Fees: $250 (credit report / etc)Escrow, 3-4 Mo Tax & 2 Mo Insurance: $2419 (634*3.5) + (2*240)ROI: See IRR calculation in report.o For this specific property, you would have to bank on appreciation.

If desired, you could even rebuild the home to a condition better and safer than the code requires, again without getting any permits.