Having just gone through the lease-up process during a winter month, I can tell you that it is time-consuming!

Building is a lengthy process that requires coordinating multiple aspects, which can be time-consuming.On the other hand, buying an existing property is generally cheaper upfront and offers the advantage of immediate availability, so you can move in or rent out quickly.

That's usually because they're not selling their loan on the secondary market. 

Do you think it's worthwhile to buy a lot and build a house to potentially sell for profit?

If you convert to your primary you'll not have a tax event until you sell. 

Our goal is to convert it back to a 3-4 unit property for long-term and short-term rentals.As I currently reside in Washington DC, I'm unfamiliar with the local permit processes and requirements.

Sell a house and buy a triplex.

In Worcester, I think your numbers are pretty close, but there are also a lot of Programs between Mass Save, and the City of Worcester that will pay for many of these things if you agree to an income restriction, or sell income restricted. 

We don't want to sell the house but want to make sure we are covered as much as possible on the extra liability of renting a house with a pool.

You cannot sell the property as it will never have clear title.