Question about using equity to build a new home

[Devyn Caraballo]

Hey BP family! Hope all is well.

Today I'm going to ask the question or at least a step in the right direction on how to analyze a deal that will be using the equity of a property to build a new property. My grandmother still owes around $40k on her home and we expect it to appraise at around $350k-$400k and we're interested in refinancing it to take the equity out and use it to turn our huge 5 door garage into a new multi family home. 

Can someone point me to a BP blog post or maybe a podcast episode or if you yourself could walk me through how to analyze these numbers, I would GREATLY appreciate it. 

Thanks in advance!