...Which is why Plan C makes sense

I did the math on Plan B. The expanded house would be 5 bedrooms, 4.5 baths (no tub), with a 2-car attached garage and a wine cellar. It includes a 486 SF one-bedroom apartment with a separate entrance. 2,980 SF not including the garage. A brand-new house with those specs could sell in the mid-$700s in this neighborhood, maybe $800,000.

To get there, we propose adding 314 SF to the main floor and a 1,084 SF second floor. We need to add 184 SF to restore the garage, but that doesn't cost the same as living space. The plan includes a two-story volume for the Trees Room, and while that isn't free, it isn't the same as living space, either.

314 SF (main floor) @ $200/SF = $62,800
1084 SF (2nd floor) @ $200/SF = $216,800
184 SF (garage) @ $100/SF = $18,400
304 SF (Trees room ext. height) @ $50/SF = $15,200

RENOVATION COST = $313,200

Basis = $467,000
Remodel = $313,200
Cost = $780,200

Sale Price = $800,000
Excise Tax (1.78%) = $14,240
Profit = $5,560

Plan A

Plan A would be 3 bedrooms, 3 baths (no tub), with a 2-car attached garage. It includes a 263 SF studio apartment with a separate entrance. 1,630 SF not including the garage. A "studs-out remodel" with those specs should sell in the mid $500s in this neighborhood--it's just much smaller than its competition.

We would leave the footprint mostly alone, other than enclosing the porch. 

48 SF (porch) @ $200/SF = $9,600

184 SF (garage) @ $100/SF = $18,400

New kitchen, 3 new baths, reconfigure roof = $20,000

RENOVATION COST = $48,000

So, our cost is $515,000 (I think the conversion to gas, repiping, rewiring, and all new finishes might bump the cost another $20,000, but it's a swag.)

Sale Price = $565,000
Excise Tax = $10,057
Profit = $39,943 (or $19,943 if I'm right about the extras)

Put in $68, get back $20 profit--there aren't many investments that yield 29%. On the other hand, $20k is too small. I'd like to scale the whole thing up--put in $314k, get back $91k. Hey...$314k sounds like Plan B.

Let's work Plan B the other way:

Basis = $467,000
Remodel = $313,200
Desired Profit = $91,000
Cost + Profitt = $871,200
Excise Tax = $15,000 (about)

So, we sell for $886,200 and it's all good.

Comparables

12721 Evanston Ave N (Bitter Lake) - Asking $769,000 4BR/2.5BA, 2392 SF ($321)
1255 NW Blakely Ct - Asking $800,000 4BR/4.25BA, 4040 SF. Built 1969, lot is 12,600 SF.($198)
606 N 138th St (Bitter Lake) - Asking $689,000 4BR/2.75 BA, 2640 SF. New, modern ($261)

At $886,200, we would be at $298/SF.