Get 3 estimates, some times they will only  replace to the point of proper old sewer line only that can save money  BIG time   .They will add a clean out  next to the house one out farther where they stopped the new sewer line  replacement .As far as suing  any one on such a manner need to figure out what the legal  cost are plus what  percent chance of success then decide  of you want to roll the dice  unfortunately this type of scam happens a lot now a days .

ThanksTalk to knowledgeable general contractors and get estimates for converting it into a legal unit.

However, failing to pay the tax could result in a lien against my company, complicating the approval process for a mortgage and incurring an estimated $10K in penalties.

The assesed value or a Zillow etc estimate of value is not good enough

I only have Long Term Rentals - for me it would be way too much work to do STR with a W2 job, unless I pay a property manager but I'm considering doing an MTR if add an ADU to my LTR (downstairs could be a studio apartment if add a kitchenette), haven't gotten any estimates yet. 

@Carlos Martinez - Are you able to provide a cost estimate for the roof and/or the increased cost of the premiums?

Also, good point about it potentially being more than the estimated 3 days once they get in there, I hope not.With all that being said, I am trying to be as unbiased and remove our “history” so to speak with these tenants regarding our decision for reimbursement, and making it purely about what is legally required and appropriate given the repair.

Having trouble analyzing this deal as there are so many variables and I do not have the experiencing analyzing deals to make me feel comfortable taking the risk.Purchase price of the land would be $250,000 not including closing cost or fees, and construction for a new 3/2 home with an attached 1/1 ADU is estimated to cost around $300,000 - $400,000 finished.

Cap Rate (Capitalization Rate): Used by investors to estimate the return on an investment property based on the property’s net operating income (NOI) and its purchase price or market value.

Here are the numbers:Purchase - $70KRehab  - $50KARV - $180KCash out refinance - will get 100% of my investment back or pocket up to $15KProblem - I am estimating that my monthly cash flow will be about $100 a month.