Is this something modern banks have forgot about?  

I am working on financing a 6 unit retail space right now and 1 of the units is not rented. 

I only cared about getting the space back on time for the new tenant and in a condition where the new tenant could move in and begin operating immediately.This required a lot of additional work on my part, and I executed these re-lease subleases for no fee, but it solved a business problem for the client and he was always glad to hear the course of action led resolving a business problem he wouldn't have to spend time addressing.In return for my efforts, I got to spend a tremendous amount of time around a brilliant business mind.

we shall see if we can afford the space necessary, but it is our current plan. we love the urban environment, things to do (things to do for kids too!)

Kory-Price per unit seems a little high, I am not sure Gordon Square is an established space to garner upward of $50,000+ / door.

Is it smart to spend the money on creating another living space and what would it do to the resale value of the home?  

There are around 40 families moving here every day and we just don't have the space for everyone, so neighborhoods like that are going to start improving whether they like it or now.

A few months ago around Christmas time we were doing a bathroom remodel for a new homeowner on a house that was flipped, the master bathroom was a disaster, there isn't enough space to go into all the things wrong, so I'll just tell you about the bathtub - jetted tub they bought from Home Depot, so it was a de-engineered Jacuzzi model, low horsepower pump, less jets than the non Home Depot version, but it looked new and shiney. 1) Tub wasn't sitting on the sub-floor, was suspended by it's rim, even it they had built the tub deck correctly to size based on everything else I sure they wouldn't have poured a mortar base for it to sit in.

A 220 space park in Raleigh where the lot rent was about half the market lot rent.  

It won't be pretty but it will be dry.The square footage of the house without the basement is 1700 sf.We are thinking a mini split for heating and cooling, but we weren't really going to go any further with the space because the comps in the area really don't support a price point too far above where we are going to end up with the current plan.