I had a house I originally purchased to flip a year ago that subsequently burned to a crisp in a fire and now I am left with a big lot with a pool. The insurance proceeds will be covering up to most of the policy limit but that may not cover the cost to complete a new build with the materials necessary to get the most profit on the back end.

Time wise, due to all the bureaucratic delays in our city and pulling permits, architectural plans, etc. I am looking at over a year total turn time having my company's original cash tied up. Up to this point, time has been on my side with the market continuing to appreciate, despite the delays.

Here's the bottom line:

The biggest concern is the downtime (~4 mos.) and costs just to pull all the permits, etc. In addition, the fees can mount to tens of thousands of dollars before I even break ground. This is where cost overruns come as a concern in that I can be into the property for way more than I budgeted. This isn't including having to pay for security 24/7 (which insurance will not cover) to keep the vagrants from burning the building down again. The insurance company does not care whether I rebuild the property or walk away with the claim proceeds.

Furthermore, I have no working history with the GC who wrote the estimates and with whom I contracted to do the work a year back. The GC was referred to me from the adjuster. I am therefore leery about whether the GC will come in on time and budget as I am beginning to hear complaints from other customers of the GC at this point which I didn't know from the outset.

Some options I am contemplating:

1. New build: projected net profit of approx. $225K assuming no more than a 10% contingency above the insurance settlement proceeds and no more than 12-15 mos. to complete and get our CO. This also assumes the market remains at least steady into next year (I gave a 10% new build premium).

2. Sell the lot, collect the insurance settlement: projected net profit of approx. $140K - in the next 30 days. I could then later transfer the architectural plans/permits to another lot in a location in which I could command a higher sale price, avoiding the security issues (vagrants, vandals, etc.) that were associated with the current lot location. In the meantime, I can roll the insurance proceeds into other flips and profit enough to potentially equal or exceed the new build profit in the same time frame it takes to build a new house.

3. Structure a profit-share/JV deal with another developer/investor: I owner-finance the lot 100% (with the city-approved plans as a turnkey project for a premium price); investor partner builds the house 100% at his/her expense and we split the net sale proceeds on an agreed-upon number. 

Any insight and tips would be greatly appreciated.