This sounds like a live in flip, which can be a nice way to get some tax free capital (if you live in it for two or more years).

If you bought it for $450K and believe it is now worth $550K (get a realtor to confirm that), think about capital gains and taxes when you sell.  

Concurrently, I intend to construct our dream home on an adjacent 20-acre parcel that I already own outright.I've double-checked the property taxes, and they're not just accurate but slightly on the higher side.

If you've lived in that house 2/5 years as your primary residence, you can also sell it tax free up to $250k single/$500k married-filing-jointly. 

Tax implications?

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This was a lot that was under contract for a purchase price of $500 and all in closing costs, hoa dues, back taxes, affidavit of heirship fees, was about ~$7300 to close and I used my business credit to purchase.Reason I purchased it was because all other "buyers" wanted to purchase at a super low price point where I wouldn't make any money.

I believe it would increase overall investment demand with our  landlord/tenant laws being significantly more landlord friendly than CA, property taxes not reassessing on the sale, consistent job and population growth, proximity to Lake Tahoe, and temperatures that are not as cold as Tahoe in the Winter but are cooler Sacramento or Las Vegas in the summer. 

Second, will you owe transfer taxes (that is very state, and even city specific sometimes)?

If you go out of state, how will you avoid being "eaten alive" by scammers?