Right now I have all expenses (utilities, material, labor, interest loan payments, insurance) posting to the WIP account. 

I would imagine you have at least 50k-100k to utilize.  

Since I am adjacent to the city limit, I can connect with City sewer and water...I was told.I am going back to see if that will let me bypass the 0.5 acre minimum lot size restriction if the new building is connected to city utilities..

I include all utilities in the rent.

You still have utilities, HOA, replacements, sundries, pool cleaning, property management etc. 

I don't personally utilize this strategy, but many other people do so successfully so you might look into that.

She took down my camera that was placed over the front door.Most importantly, I rented my home to a lady and her 2 daughters, but it is pretty clear that she does not live there, it is only a man’s stuff in the master bedroom closet, and a man’s name on the utilities.

RentingFamilyMember is not interetsed in making money, just not paying the food, utilities, etc. of the SiblingRenter.(2) RentingFamilyMember's AGI is too high and Schedule E passive losses are limited.

This property is about 50 years newer, and has all modern utility upgrades.

I will then utilize my 529 plan to pay rent to them.