Most of us would fix the credit situation, however long that takes, and then move forward with the plans. 

If you plan on selling it, I wouldn't take out a mortgage if you could do it with cash as financing will eat into your profits. 

Just for kicks, i looked up a few sf properties sold last year and see that land ranged from 40% to 60% so without knowing your property specifics, dunno why your land would be assessed 70%all i can suggest is look at comparable sales and see what the ratio is and then appeal using that dataalso i remember many years ago, a home was assessed higher than the transaction amount and after failing to reach agreement with assessor office, the homeowner reached out to the different elected city reps.

I'm interested to know how much other house flippers are paying their GC and what type of structure plan they have in place. 

I'm just really frugal and really efficient in the way I plan, shop, and execute.  

You would be wise to hire an attorney in your county that is familiar with such topics, specifically "Quiet Title Action". 

:P There isn't anywhere near enough information in the original post to provide specific advice so I asked the poster to reach out.  10,000 foot overview the best advice would be to speak with a knowledgeable INDEPENDENT insurance agent and be as forthright as possible with your situation. 

I've been building a 1 bedroom carriage house on the property in my spare time for the last few years which my wife and I plan to move into in the next few months so we can rent out the house.

It's detailed, thoughtful, and specific with links for each item making it fast and easy to find and purchase everything you'll need.

Talk to your agent and don't try to hide material facts about what you're planning to do.