Partial Lien Release -- Perform a Lot Split before adding a unit?

[Brandon Ly]

Greetings Bigger Pockets Community!

I currently own a single family residence in LA county that I am planning to build a detached unit (SB9) and then subdivide the property using SB9.

I have a mortgage on the house so I'll need a partial lien release from the bank to split the lot and wanted to be careful that I don't do anything to compromise my chances of success. I've come to learn that the bank will require that their collateral be at the same LTV% before and after the lot split, therefore requiring a paydown on the principal.

So it got me thinking, if I build an SB9 unit in my backyard, the property is going to be considered a duplex and will appraise for much higher than when I originally got my mortgage which will bring LTV% very low. After the lot split, it'll appraise for a lot less since the units will now each be on their own lot and therefore, the appraisal after the lot split will be much lower.

So if I build the SB9 unit before I do the lot split that’s going to put me in a position of a significant pay down to get the LTV% down to what it was when both units were on one lot.
 
Here’s the numbers below. Is my understanding here correct? Should I do the lot split first then? I really wanted to get a unit built before I begin my lot split but not if this is going to require a significant paydown.

Let me know what you think! Thank you!!