Lets do the math, and you can change your assumptions:
1. Assuming you are an architec and a contractor trying to take it to City Planning & Permits
$200(low side) * 400 sf=$80K
2. Remodelling on the rest of the home $50K
You already spent $130+$460K(purchase)
Are are any homes selling for ~$600K in that neighborhood which you already notice homes have been not been fixed up? So you want to sell at $700K?
Does it make sense?... more