Building house to resell. Need advice with exit strategy, 1031?

[Joe Sno]

I bought a house several years ago on a big lot and subdivided the land.  I sold the house and was left with a buildable lot free and clear.  I am currently having a house built on it now (foundation just got poured so have some time to decide).  I am using about $100k in cash and $250k from my heloc to pay for everything.  The house should sell for about $650k so leave me around $250k to reinvest after real estate fees.

What would be the best way to move forward?  From my understanding, I can't 1031 it unless I rent it out for about a year.  At that point, I still wouldn't be able to pull any money out to pay myself back and pay my heloc off so I would likely reinvest the whole amount to say a million dollar quadplex.   Then from my understanding, I could cash out refi but that would likely cost 3-5%.  Am I better to just pay the long term capitol gains?  From my understanding, 15% on just the profit so $37,500?

Any other strategies are welcome except I don't want to move into it for 2 years.  Thanks in advance.

[Dave Foster]

@Joe Sno, If you backed up one step and completed the house, put it into rental and refinanced it immediately, well  before you later sell and do the 1031 after a year you' could get your money back at that time.  Then when you did a 1031 later you would simply have less cash to put down.  and that might work to your benefit.

One thing to check though - and since super star @Natalie Kolodij is in on this thread - Hey Natalie, if you take a lot that you've owned for over a year.  But then build and sell immediately do you get cap gains treatment on the entire sale??  My understanding is that the construction and immediate sale is treated as inventory and you pay ordinary income tax (even on the lot).  If so then the hold of a year would benefit you in numerous ways.