I think this article sums it up nicely:http://www.insure.com/home-insurance/home-replacem...It  emphasizes that the current market value of your home (say Zillow estimate) is a very poor way to estimate how much it will cost to rebuild in case of a fire or other loss.

They do decrease your ROI but that is accepted loss in my strategy.

Could have sold it at loss thru a divorce attorney. 

Job loss   ( unemployment is only 5% ) and if Trump gets his way it will go lower4. burnt out landlord syndrome  ( land lords are somewhat smarter these days IE not buying in the hoods like they were )  although some of this still goes on and always will.So Tim were do you predict the next inventory produced by a shake out will come from. ?

Meaning - in my experience the amoount of CCR required to drive the IRR strictly though cash flow is not likely to materialize due to economic losses.

Selling at a loss is never fun My advice is do your research on the area and don't rush into anything.  

. , so it wasn't a loss at all!

That could easily produce $1K net monthly cashflow for you plus the other benefits of real estate: appreciation, loan paydown (by tenant), tax benefits (paper losses), and inflation profiting (inflation erodes the debt).

So naturally my bids are coming in much higher than I anticipated when I first got quotes, and I'm worried that building at peak prices will result in a potentially significant loss once building costs and corresponding home values in the neighborhood normalize.

My friend is willing to restore the full 50K back to the renter, take the loss and even buy the OTB back if need be.