In full disclosure, I never have done a loan this size personally only has dealt with banks for clients and know many friends who own very large portfolio who deal with banks on a regular basis. 

I am wanting this discussion to be more about the extent of rehab rather than the size of the project, if that makes sense.

Should be easy, size of lot?

At the same time, if you are not already very familiar with what your ARV is, look at past sales in last 5 months (because rehab might take 30 days minimum), with in .5 miles, +/- 15% square footage, +/- 10 years, about same land size (or adjust). 

My opinion: do the least amount of physical work possible (leave that to others with that expertise), hire good land planner/architect/civil engineer team and you do the design/land planning (find out what lot size is best from builder/brokers), get the subdivision map approved (that's the document approved by local city/municipality that approves the single lot be divided into many smaller lots), sell the land+map to builder.

Tiny homes can cost more than average size homes after customizations.

Properties can be found on Redfin, Zillow, realtor.com, etc. and normally in most decent sized markets (like yours) they replicate off of the MLS within 15 minutes.

QUESTION: I just found out one of my properties is zoned to build a NON-owner occupied ADU of the maximum size of 864 sq ft.

AS @Callum K. and @Brian Burke and @Jay Hinrichs have all noted, once your SFR portfolio reaches a certain number of units and dollar amount in value it becomes less advantages and more riskier for you exponentially every time you add a property to your portfolio.If you're serious about growing a portfolio of that size do it in dollar value on the Institutional Multi-family side NOT volume of SFR's.

All that being said, the standard BiggerPockets.com mantra is that equity represents lost money and opportunity cost, there are plenty of voices that logically and coherently argue that side of the debate (who will be joining this thread shortly), so by all means weigh all options, figure out what works for you given your particular goals and risk tolerance, and there is no "one size fits all" solution.