If you drive NOI higher, even if the Cap Rate is unchanged, your property is worth more. 

Total months of housing inventory remains at critical levels and continues mostly unchanged at 0.5 months for the area.

The unemployment estimate remained unchanged at 4.5%.

http://www.har.com/content/newsroomHouston Real Estate Highlights in May: Single-family home sales rose 10 percent compared to last May;On a year-to-date basis, single-family home sales are up 3.4 percent;Total property sales jumped 7.1 percent to 8,703 units;Total dollar volume rose 7.3 percent to $2.4 billion;At $290,931, the single-family home average price was statistically unchanged from last year;The single-family home median price was also flat at $225,000;Single-family homes months of inventory climbed to a 3.6-months supply versus 3.0 months a year earlier;Townhome/condominium sales were unchanged with the average price down 2.6 percent to $198,411 and the median price up 7.6 percent to $163,000;Leases of single-family homes were up 4.1 percent with rents unchanged at $1,866;Leases of townhomes/condominiums soared 10.7 percent with rents unchanged at $1,666.

http://www.har.com/content/newsroomHighlights: Single-family home sales rose 2.2 percent compared to last February, marking the first increase since September 2015;Total property sales were unchanged at 5,548 units;Total dollar volume increased 1.2 percent to $1.4 billion;At 260,872, the single-family home average price reached its highest level ever for a February;The single-family home median price was unchanged from a year earlier at $200,000;Single-family homes months of inventory climbed to a 3.4-months supply versus 2.7 months a year earlier;Townhomes/condominium sales fell 17.8 percent with the average price down 1.3 percent at $199,205 and the median price up 2.8 percent to $150,000;Leases of single-family homes soared 14.6 percent with rents up a fractional 0.6 percent at $1,688;Leases of townhomes/condominiums climbed 10.3 percent with rents up 2.5 percent to $1,545.

My monthly income has been fixed and unchanged from this for ten years.

The average rent for single-family homes was up 1.5 percent at $1,838 while the average rent for townhomes and condominiums was unchanged at $1,589.

Going this route bypasses them all together since the exterior remains unchanged but I get an extra 400 sf of living area for consideration during my cash out refi appraisal.

Assuming your rent and expenses remain unchanged indefinitely, it would take 15 years to earn the $315k you’d make from the sale.

You fixed your building and even at unchanged NOI, its value improved so cap rate is now lower (NOI represents a lower portion of the value).Cap rate is not a driving force, it's the result of dividing the market value of the building by the NOI.That being said, it is true that not all improvements will raise the building's value.