My husband managed the project and he learned that it takes longer to complete than he was expecting due to working around contractor's schedules or materials not showing up on time.

Once all of the work is completed, I would then go to one of the lenders you're talking to and refinance the property and get all of the money invested back out, pay off the seller-financed portion of the loan ($450k), pay off your grandparents' loan, plus interest and have myself a nice 4-plex that didn't require me to put any of my own money into the deal.  

Our strategy is to buy and sell once the builder completes selling all the houses in the community.The base price of the house they're selling is $420K, but the model house, with all upgrades, is priced at $450K.

I would think logically that the appraiser can complete the rent analysis "as completed". 

Which then rolls into permanent financing upon completion.

@Jon HaneyWell, @Basit Siddiqi has already weighed in that its probably a business loss.But to add my 2cents if it helps, since it was never rented I guess its like a flip and you can claim a $19k loss --- sold for $29k but your cost basis is $48k.Otherwise, its just a sold property / capital asset so your schD would show a $19k long term capital loss. 

They are contractors so they can probably complete a 3rd party rehab as well and are knowledgable about the market.Message me direct with your email/cell and will connect you.

Rehab timeline less than 1 month after they vacate.Now considering letting them stay, raising rent to $900/mo, completing minimal repairs as the house is currently in acceptable shape to them & good condition overall, DSCR c/o on a lower ARV.

Property reno has recieved numerous compliments, just completed first guest stay January 2024 Lessons learned?

As long as you are frugal and complete your due diligence and a good portion of the leg work (as it seems you are doing), the overall costs of the development wouldn't be outrageous in comparison to a comparable existing park.