Previously, I dedicated many years to selling custom and semi-custom residential properties for a highly respected and well-known builder in Atlanta.

What I can say is that the headlines about the difficult tenants and rent restrictions cause issues or a small fraction of property owners - but you'll never hear about the 99% of cases where tenants are paying on time and respect their landlords' properties. if I'm in your shoes, in terms of recommended criteria, I would opt for looking for strongly appreciating areas and not just monthly cashflow.

With respect to managing the project on your own, this proposed addition will require multiple subs, not just one.

Treat them with the respect you would expect from an employer, and you'll often receive consistent loyalty in return.To that point, be a good boss.

This might include mandatory disclosures or ethical guidelines similar to those that realtors follow.Education and TrainingProviding comprehensive education and training about each other’s roles can foster mutual respect and understanding.

I like the way you're thinking with respect to the San Luis Obispo housing market.

Just like when tickets for a Steelers game are expensive you generally have more respectful fans, when they get cheap you get more people getting hammered and being jerks. 

I felt a fiduciary duty to respect the gift I was given (and the person who gave it to me).  

Much respect, Phil Misciagno 

Ultimately the value of the single family home lot is the critical piece to the equation.With respect to financing the new build, assuming you receive the zoning relief and can subdivide the parcel and the parcel is released from the current mortgage you should be able to use the land towards your equity.