Maybe have a contractor advise what is possible with the existing structure before deciding.

Working with experienced professionals is often advised.

Readers are advised to seek professional advice.

In theory, you would only hit the maximum SS amount (possibly SDI depending on your state).I think the bigger question is: did someone advise you on making an S-Election for a rental property?? 

Thank you for your reply and advise Simon!

I've found that new construction in most cases has less margins and more "professional players".If you aren't going to go ALL IN on new construction with the plan to build many houses I don't advise on it. 

I would advise to go check with the City.

Readers are advised to seek professional advice.

So, I will dispense this advise generally, as it can apply anywhere.

Even the Attorney General has advised that passage would likely result on a lawsuit that would not be favorable to the state.