How do you go about determining market rate?

Fortunately for me, I started investing a time in the market where everything went up.  

A great place to start is https://www.biggerpockets.com/meet which you can use to find like-minded people in your area and every other market across the nation that you may consider.You'll find some helpful tips at https://www.biggerpockets.com/starthere.For tips on how to get the most out of BiggerPockets, check out: https://www.biggerpockets.com/rei/biggerpockets-com-tutorial/The BiggerPockets Keyword Alert System is an awesome tool: https://www.biggerpockets.com/renewsblog/2012/12/1...See you on future threads!

Plus how did he go there he must live there or close so your only working one market.

There are very few markets that cashflow with 100% leverage.

No one has a "crystal ball" to time the market perfectly. 

Are you currently investing in your hometown or are you looking at out of state markets?

Recently, our real estate agent did a market analysis and estimates we can sell for between $575K-$585K, resulting in a net gain after all of our fees of about $100K.

I'd recommend looking at costs. your build cost is going to be well over other homes because of the fixed costs like slab, Hvac, roof, etc. check the market drivers and weight the benefits of short term versus long term. long term is no furniture and help pays mortgage but at this size it doesn't really cover everything. we didn't find a lot of economies of scale in single family detached. can you build more than one unit?

There are no laws restricting mark-to-market rents.