Torn on a Rental Property - Last Day of Option Period

[Jessie Harrison]

BP, I NEED YOUR HELP ON THIS ONE. I floated a similar question last week, but now have more information. 

So today marks the end of my option period on a property that I'm unsure about. I stumbled upon an out of town deal for $55k and was going to use a conventional loan (20% down payment) and fund the initial estimated $25k of repairs out of pocket, which would have taken most of my cash.  After further contemplation, I think that I am going to use hard money to purchase, rehab, rent, and then refi.   The reasons that I am undecided are below:

1. This property includes a 2,000 sqft SFH and a stacked "duplex" (both units are 860 sqft - top floor is a 2/2 and bottom floor is a 1/1). The SFH is in good shape, but needs a few updates (mainly roof and does not have central AC).

As for the duplex, the bottom floor of the duplex has been completely gutted due to prior leakage from the top floor. It also has ceilings that are lower than 7ft (as does the top unit). Also, the top floor is basically move-in ready with minor upgrades. Is it just me or will it be next to impossible to have someone rent out a duplex unit with ceilings lower than 7ft?

I am considering making the top floor a 3/2 by consolidating the bedroom from the first floor to make this one unit. My logic is that is may be more cost effective in the short run.

2. The local economy is tied to oil and gas so much so that in 2014 Forbes listed this place as a top 10 fastest growing small cities in the US.  However, the local economy has since gone down given a couple of major companies moving out of the city.  Oil prices are starting to improve and it looks like the market may be coming back, so I guess it's ideally better to buy at the bottom of the market, right?

3. So this sounds like a pretty shaky deal, except the property next door which is about 400 sqft smaller (but updated) just sold for $101k. It seems at the very least to me that the SFH has upside and could carry this entire investment.

Estimated Rents:

SFH - $800/month

Top Duplex unit (ceilings lower than 7ft) - $450/month

Bottom Duplex unit (ceilings lower than 7ft) (if repaired for an additional $20k) - $350/month

4. The property sits on 0.75 acres and future units could be built if I so desired.

Please let me know your thoughts and suggestions. Thanks for your help.