Here are my steps: 1) Check market rent.2) Adjust current rent based on market rent.

Is there a housing shortage or is there really a problem with the BARRIERS caused by productivity, land use, zoning and mandates that limits construction?  

Hi Silas.Do you plan to have a GC or handyman run the construction project?

Based on the quality of the video, their ability to adjust based on our request and overall communication styles we picked 2.

It also gives you the leverage to adjust your rate by putting more money down.

In the City of LA these unpermitted units typically still end up with a decent amount of construction work to bring it up to current code standards, but if you plan for it, and your budget/proforma allows for it, it can be an acceptable investment.

I do some construction myself and have an extensive team of framers/ electricians/ plumbers / HVAC ect. 

In working on construction loan financing, the lender informed me I'll need to unencumber that portion of the property (makes sense) before closing on the construction loan.I understand there to be two methods generally speaking: refinancing my mortgage and removing that portion of the property in the process OR attaining a partial release from the lender to remove that land.I *strongly* want to avoid refinancing as I have an amazing rate, but partial releases seem complex and also require a survey.

They are vertically integrated management and have their own construction warehouse and contractors.

Also, doing your own research on newly renovated or constructed homes that have recently sold in the area on Zillow or similar websites can be a good first step as well.