I have resources I use to get an estimated idea of that, but always good to hear from someone whos already in the game.

Architecture did a design and well respected contractor estimated the buildout of 4 plex would be an additional ~800k for total project cost of ~1M. it would be ~1.2M for the 7 plex.  

My initial guess would be look at 1 bed 1 bath rentals in the area but is that the best way to estimate?

Depending on your estimate of the ARV and the ability to raise the rent on the 1BR, this looks like a "lendable" deal, IMO. 

Look at before and after pics and real estate listings for a flip and estimate what work they did and what it would cost you.

Please also make sure how much points or cost you are paying by looking at the Loan Estimate.

You are correct, that this has long been the conventional figure used to estimate cost for buildable sf in NYC. 

Couple of things I would add as I am an investor and also a licensed GC(i.e. builder)  there in the area. 1) That property might have a zillow estimate of 1.9 million but its only 4,000 sq ft. 

At $1,600-1,800/month, how does this compare to your estimated HELOC payment plus other expenses (maintenance, utilities, etc.)?

Please also make sure how much points or cost you are paying by looking at the Loan Estimate.