Purchase Price $77k. Rebuild cost $880k. Insurance

[Isaac Atwood]

I purchased a 3 family for 77k. After repairs it will be worth around $150k resale value (TOPS). The insurance company refuses to insure me below a rebuild cost of $880k. 

I know this 3 family isn't worth anywhere near $880k, and the insurance premiums are killing me. How do I find a good actual value insurer that will insure to my after-repair cost and not my initial purchase price?

[Greg M.]

Originally posted by @Isaac Atwood:

Is it typical for a rebuild cost to be many multiples of the purchase price?

It can be. The rebuild cost has nothing to do with the purchase price. 

Take an extreme example: You can purchase 2,000 sq ft homes in Flint, MI for $1,000. If it were to burn down today, would you be able to rebuild that same home for $1,000? Reality is that it would probably cost you $200,000 to rebuild the home. After being rebuilt the home may still only be worth a few thousand dollars because no one wants to live there, but the insurance company would be on the hook to rebuild the place or give you the funds necessary to rebuild.