Sometimes this equates to a $25-$50 bump, and sometimes this can even be a $150 bump, if the market dictates it.You mention that there aren't really market trends or numbers to compare, but put yourself in the Tenant's shoes. 

I repossess and changed locks and then moved his stuff to storage unit

While I know nothing about the Victoria market, if I were in your shoes, I would lean toward #2 (or #3 if you're down with having roommates).

I bought it via VA loan in 2008 for 149.9k, 5bd/3.5 ba, 1978 sq ft, zip 20111Refinanced twice to pay bills/bad spending/money managent habits to current 225k (cashflowed for the past 2 years @350 a month to get it to this point), refit kitchen and bathrooms and opened up living space in 2013 after an inheritance (30k), new AC/furnace in 2012 (8k), on site storage shed installed 2014 (6k), all those expenses paid out of pocket before I started getting smarter about stuff.

If I put myself in the shoes of an underwriter, two reasons come to mind why you might be applying for a refi and HELOC at the same time on two separate properties:1) Maybe you don't know any better and no one told you it was a no-no.2) Maybe you're a devious fraudster trying to borrow more money than you'd otherwise qualify for by doing four at once and not disclosing this.I as a LO that interacts with humans would be inclined to assume #1.

I just don't see people living in them long-term, could work for a single but a couple in a 250' home with one work-at home spouse (which is increasingly popular) would be rough long-term, or if a single finds a partner who has a lot of shoes or bikes, doesn't want to climb into a loft bed, etc., For a vacation home or for a short time span, they are great. 

He’s going to be asking 12 dollars a sq ft lower than market avg in our area but, there is hardly no storage for seasonal decorations, (Christmas tree, fall decorations, etc) no garage, no fence for yard, and no place to store our dogs.

I plan to add in 1 bed, 1 bath, and close off a storage room.

But would love to hear your experiences and suggestions if you were in my shoes. 

From there do you want to invest in single-family, apartments, self-storage, etc?