It sounds like you have an un-permitted unit, which is essentially always a risk since there has been no notice to the AHJ that it exists and they can therefore initiate a code case to have it removed in most cases.

This is obviously much better than $1,400 per month.On top of that, you will now get 2x the depreciation write-off so your taxes should go down.On top of that, you will now get 2x the appreciation when real estate price go up.On top of that, your tenants are helping you pay down the loan, initially at about $100/mo for both properties, which gradually gets better and better.On top of that, you now have more units so if one or two goes vacant, you have more renters covering the losses of the vacant units.If you want to keep these properties, I would do a cash-out refi and go buy more rental real estate.

Aside from what everyone else wrote, note that adding units require various steps that you may not have considered (e.g., adding a new street address with USPS, etc.).

I am not a PM, but I do self manage about 50 units.

Rental Property is located in Upstate NY in Oneida County.I have a tenant who is currently scheduled to have their lease end at the end of February; they will have only occupied the unit for a year at the end of their lease.I'm not looking to extend their lease and would like to have the unit vacant upon lease end.

Building small units in small counts is expensive development.  

They are the best property management software there is, but they have a minimum portfolio size of 50 units.

Multifamily units won't be for sale, so you're saying the co-ops and condos being built will be the main affordable housing supply?  

Sri,Are you a General Contractor/Builder or are you simply looking for financing to build a 2-4 unit?

I own a commercial unit, and I’m trying to determine a fair rental rate for the space.