Just a heads up for future reference.

I would say this to make sure you are planning your financials ahead of time to keep your options open and help you be more flexible when working on deals.

Your property management background will give you a head start.

In retrospect I would have spelled out the construction process more clearly in writing ahead of time.In your case the existing tenant is getting no new value so there is nothing for them to gain with this project.

@Jonathan Greene At risk of getting sucked in here, I did go ahead and click on @Scott Meech's post here: https://www.biggerpockets.com/forums/925/topics/1217313-dete...I often agree with what you have to say, but in this case, I have  to disagree. 

You walk away slightly ahead with the rents collected, 2nd lender loses at least $50k of his $95k in selling costs, and other expenses.

I totally get wanting local insights in the Sacramento area; it can really help.With your hands-on experience in flips and rentals, you’re already ahead.

I have done a few hundred sub 2's in my day and all sorts of issue arise that your probably not thinking of or no one could have thought ahead about..

You see a house that is listed for sale, click on a box, enter 3 things...and eventually someone gets back to you. 

It is definitely not as easy as it was a couple years ago and we have difficult times ahead - but that doesn't mean I think it's a good idea for everyone to stop investing passively and run to SPY or single family homes.