To be more specific would we be able to create a list of the, let’s say 10 essential formulas need to properly assess an investment property?

He also mentioned that they have a 50% rule in which you can not "improve" the home more than 50% of the assessed value (my understanding is tax value) which is not possible to get around in my current situation.

If they can't assess your jacket size correctly without measuring you, find someone else.

Sounds like a good plan to me.Although this is not a comprehensive list, it will get you started.

The bank will send out somebody to do their own assessment and you will borrow against that. 

You're correct in the tax assessment of NJ; however, with that said, where can you purchase waterfront property $100,000???

I rented the rooms out while living in it for years and now it's assess for $260k.

The good thing is there are a ton of positive professionals who will offer solid advice AND you are aware of some of the mistakes you made, which helps assess what happened, so kudos to you!

Our comprehensive plan determines the density in our county.

Haha the tax assessed value of the house is only about 20k; hopefully the renovation doesn't end up costing more than that.