What to do with this addition?

[Cody Hill]

Hello there bigger pockets,

I found a pretty under valued house just south of Edmonton, Alberta. Now what makes this a little more interesting is the odd addition someone added to this house. The house is on the market for 290k, but was assessed for 412k. The surrounding houses are a little larger but went for $425k and $456k. The house doesn't make for a very great single family rental as the rent rates for a 3bdrm are around 1800. If a person could add a basement suite then it would make sense. 

The other option would be to remove the addition. Interior the house needs some new flooring but looks really good still. 

Any ideas? Worth looking more into? According to the real estate agent the permits were pulled (although expired) and the city is willing to work with the buyer to finish the space.