2br vs. 3br - possible renovation?

[Kyle M.]

So I looked at a 3br property that is around 900 square feet today.  The condition is decent and it needs some repairs but it is in an area that is borderline bad.  The major feature that stood out to me where three small bedrooms.  All around 10x10 in size.

How does three small bedrooms affect the rent and/or ability to rent the unit?

Two of the bedrooms connect by a wall so I could make it 2br (if this is possible).  This would lead to the property having a master bedroom and a smaller bedroom.  This would be more desirable and I believe it would give it a nicer feel and create less turnover.

I plan on meeting with a GC next week to get an estimate because I know very little about the construction side of things.  First possible deal by the way!

The numbers (since these matter):

List is 75k, numbers are based on selling price of 70k

Median rents for 3br in area: $1200, I'm factoring in $900 due to my cash flow to play it ultra safe because of the small size.

Factoring in PM at 10%.

Rent - Mortgage&Insurance - Tax - Vacancy (10%) - Repairs (10%) - PM (10%)

900 - 310 - 225 - 90 - 90 - 90 = +95

$900 is likely very on the safe side so I feel that this is a good deal.  The most I would be willing to pay is total repairs subtracted from the 70K.  I will be getting and estimate from my GC next week.

Do you think that in this situation that it is warranted to tear down a wall to create a better living condition?