Buliding smells, everything is dated from applicances to the layout to the paint. 

The single family home will have to have it's layout completely redone.

With it being a 3/2 already at 1300 sq ft, I don't know that adding a bedroom or a bathroom would get you a lot of bang for your buck, unless the layout of the house is conducive to easily adding those. 

For example say the deposit would be equal to one months rent but you make your move in fee half of that, the tenenat only has to layout half of the cash they otherwise would have upon move in.

Many townhouses are only 15’ wide and offer nice layouts.

If you choose to go that route lay out a plan that will allow you to offset the taxes as much as possible. 

Look at the finishes of the comps.3) the building has a weird layout and the backside/entrance mates up to an industrial area4) everything in the tree streets is very old.

I love going to different homes, seeing the vast differences in quality and layout, comparing them to the local market, and putting it all together to make a "big picture".My largest challenge so far is developing an effective marketing system. 

A 2-3 bedroom would be great if the layout would allow for the living room to be converted into a bedroom.

Lay out expectations for the tenant.