Building on an existing lot

I'm in a position where I can add a second house to my existing property. I am in an RS-1-7 zone in San Diego and I have a 6,300 sqft lot. My construction consultant says there is a way for me to permit a 700 sqft house on the backside of the property. This would have a garage with two to three cars worth of parking and alley access. A 2+2 house at 700 sqft with permits will bring me to $270k to build. Comparables look to be around $310k but rent looks like $1,800-2,000 a month. Which could bring me in $300 a month, roughly. Something my consultant tells me is that he can build it in a way so some garage space is easily converted into another room but obviously not permitted. That's the variable I'm unsure about and whether that is a good idea or not.

I am not in a very favorable neighborhood. However, I bought a 3+1 house for $360k about two years ago and it's now at $410k. I would also be putting another bathroom making it a 3+2 and trying to rent this property also. All in all, I would owe $630k, total worth would be around $745k, mortgages would total around $3,600 and potential rent income would be about $4,400. I'm worried that these margins are rather narrow. Does anyone have any support for this idea or is it a bust?

Thank you for any help on the matter.

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