Because the Indiana property is my first investment property and is not in a LLC, I was advised to get an umbrella policy.

Readers are advised to seek professional advice.

A lawyer advised me to dissolve the business because we can't fulfill the purpose of the business then sell the lots. which I'm fine with but I really want to keep the lots and build on it.

I would strongly advise you get more than 2-3 bathrooms.

Readers are advised to seek professional advice

If you can't find that in your local market then you may have to go to a higher price point but it means using more of your savings which I'm advising against.

I don't know enough about the benfits of one or the other to advise him.

First and foremost, buying more than one property at tax auction is advisable to help you unload those that may have liability issues. 

Start with your primary, rent out any spare bedrooms "house hack"Use that to practice upgrades, kitchen, bathroom, curb appeal... etcNow you have experience as a landlord and flipper, use that to buy a distressed propertyAdd 40% equity to the property through home makeover, refinance into a low cost mortgageNow you are cashflowing a healthy margin on a second property, use that to build equity over time, cashout later and buy your duplex/quad.If it's going to take you 10 years to save up a down payment for a small apartment building, yeah it makes more sense to start growing your portfolio with cheap SFR flips instead.Every market is different, every borrower is different, every property is different, it would be ill-advised to recommend anything without recognizing the individual's nuanced goals and objectives with their next acquisition.

Often times, I advise folks to start with HML or PML and the refi into a DSCR loan with a bank/CU when the property is stabilized.I am going to assume that a HML/PML loan would be at a higher cost/rate than a bank that would play ball, so I would prefer that if possible...