I don't know your local laws, but here in NJ increasing units is very difficult legally.

You won't be subjected to capital gains taxes on the increase in value of your property.A little tax theory here to help understand: There are many different types of income, and many ways those types are taxed.

Here are the detailsOriginal Note:  $48,500, 8% interest, 30 years, secured by first lien on $70k property, typical note terms.Date: 12/9/2009Current Value:  $41,505Payments:  $505.88/month includes $120/month escrow for insurance and property taxes, No payment missed, 3 payments late but not by more than 30 days.Escrow:  -$800 now but payment will be increased for negative balance and increased taxes/insurance.My guess is its worth $55,340 valued at 6%

There's just too many factors to take into consideration. 

ZEstimate is what Zillow thinks the property is worth and it is pretty pointless because it doesnt take into consideration the condition of the property.

I would get your finances in order (pay off all debts) and increase your savings before doing this.

Now if you find a builder willing to go partners and build at cost with you financing the deal this could be mutually beneficial and greatly increase your returns.

Taking a look at the last 5 years alone shows an increase in property values.

You can make it clear to the tenants that they will be held responsible for excess damage or waste caused by the animal,  just as if they themselves did it.While you need to be careful to avoid a claim of retailation,   maybe schedule the next couple rent increases to be a couple percent more than you otherwise would,  and bank those funds towards expected greater turnover costs.  

Also when I get my contract notarized does the seller need to be with me and who do i give the “consideration (downpayment) money too ?