Rental Rehab- kitchen to bedroom conversion?

[MacKenzie Clinton]

We just closed on an awesome off market deal with a retiring investor this month. One piece of land with 2 sfh in a quiet B neighborhood for 36,000. One needs no work and has good tenants already in place ($475/mo. I could probably raise to $500). The other was recently vacated and needs some attention. It is 1,000 sq ft, 2 bed, 1 bath all on one level plus a basement storage area.

It needs:

1. Cosmetic- paint and flooring

2. A couple new windows

3. Sealing around the foundation

4.  Some front porch repair for stability plus a facelift (I'm thinking new posts and some fresh paint to pretty it up)

5. Heating/cooling. I'm getting some quotes this week but considering mini splits.

If I do these things I'm looking at $550 /mo rent probably. It occurred to me however that the main living space is HUGE and the kitchen is closed off and awkward. I'm thinking I could put a door on it and have a third bedroom, then move the existing counters etc out to the large living space for an open living/dining room. Three bed rentals are hard to find in my area and I could then rent it for $700. 

The pipes are all easily accessed in the basement ceiling so I don't think moving the sink would be too pricey. There is already electricity in the wall I want the kitchen on and my dad is an electrician so he would put in electricity for the fridge and stove for free. 

Has anyone done this?  Any possible money sucking factors I'm missing?  Do you think it's worth it?