In either case it will cost more to finish that space than it will bring in an appraisal. 

2. my second Option / thought is to use my VA loan, and purchase a nicer home / one that will rent for $1,300 - $1,500 a month ( afer the 1 year O.O. rule is meet ) , and plus I can technically get in a " Future " rental for 0% down .I could find an REO/foreclosed property that needs minimal repairs ( since VA loans are quite strict on the condition of the property in order for it to qualify and get approved for a VA loan ), and then do some updates ... paint / flooring while I live in it for 1 year , and then repeat the process of doing a Cash-Out refi and use the money for a down payment of 20% down on another $80,000 - $10,000 property.... wash ,rinse,repeat3.

Type @ sign and then start typing the person's name with no spaces.

The home does not have an open floor plan.  

We love renting from ourselves at the first practice, and would like to do the same here, but this building is multi use, with our dental practice on the first floor, and 7 apartment units (2 in the basement, 1 on the first floor, and 4 upstairs).I have been taking a crash course in multi family real estate here at BP and Google. 

I had two floors of a 3 family that was being used as section 8 housing.

Needs roofing repairs/paint/sheetrock/flooring work. 

For the existing tenant they are conditioned to an old and worn out space.

Initially I was interested in purchasing, renovating and leasing the units out - there are (3) 2 bedroom/1 bath (approx. 1000 SF ) units, (2) 1 bedroom/1 bath units (approx. 750 SF) and a office unit on the ground floor (approx. 750 SF) , these units would rent out between $950 and $1,300/month - however, the owner was not interested in selling but she did offer the option for a triple net lease. 

I do not do much in the buy & hold space, but I am quite active in the flip realm.