Then get a business umbrella policy.

I am aware that since I’m renting one unit out I need a landlord policy, but can my policy be HO3 or does it have to be DP1? 

Assuming you don't have a mortgage that requires a certain level of insurance, you can get a stop-loss policy covering all the properties. 

Unless you're in a Class A Neighborhood like Palmer Woods, Indian Village, Sherwood, etc,. the additional rent probably won't support the cost to build:(More profitable to take the build funds and buy another property.DM us if you'd like to discuss more...

Real estate takes many years to be able to support yourself, and that’s if you do everything right and the cards fall into place.

A link to FilePlace is at the bottom of every page, making it easy to find.If you have technical issues, email support@biggerpockets.com, and someone will help you.

I feel supported by the fellow RaiseMasters and have had a very positive experience thus far.

@Mohit Gupta  depending on number of occupants your regular insurance can cover it, read the policy, ours covers two roomers. 

Some markets can support that expense and others can't. 

Determine if the area can support new construction.