The property could be in perfectly livable condition but you may just want to update the paint or a toilet or something small, or you could tear down the property and rebuild it (must keep foundation). 

This is a single family property that we will rebuild into a luxury home. 

Where is the house, as that has a huge impact on what the costs to rebuild will be. 

I need to pull the trigger this fall on an expensive rebuilding of the parapets on one place, they're falling in.

It sounds to me like the cost of rehabbing this house or rebuilding this house; you could end up pricing yourself out of the market.

The strategy I am considering is to tear down the existing structure and rebuild w/ a 4 unit complex.

Current cost for the owner is 4500 a year, which is really good to begin with, they have a 10k deductible and it isn't insured for the full rebuild costs, so that too explains the lower cost.

I'm a contractor by trade so I will be doing the rebuild myself.

I have a lot of $200K buildings that would cost $500K+ to rebuild if they were destroyed.  

I cannot afford the expense of rebuilding the water pipes in future .