Most of the time, figuring out what to do with a property to get the max value out of it, is the hardest part of a project. The seller has already done the majority of the legwork on this one, and I don’t think there are many different ways to maximize your potential. The seller has plans drawn up already that will be available upon request.
The property is a 2/1 with 676 sf and sits on a lot zoned R2. Per the plans, the house would be converted into a 4/2 and bring the square footage up to 1,260. In addition, the city will allow a building to be built in the back, so long as it is under 500 sf. The plans have this as a 2/1. If you chose to do this and keep it as rental, you should anticipate rents of $1,400 for the front unit and $1,050 for the back unit. You can expect costs to build to be $90 to $100/sf. That number will vary depending on finishes and who you decide to hire.
Being that you are significantly altering the property, you should be able to label the property at 2021 built. As far as comps go, you have one new build within a half-mile. It is a 4/2 with 1500 sf and is pending for $230k. You would be in a league of your own with the additional unit in the back so it is difficult to determine what your total ARV would be.