I was wondering if anyone has a suggestion as to how to go about it.

Quote from @Braeden Warg: The right way to do it is to contact the city and ask them.

I personally put them on a schedule, long term, because I do not have the time to do the work myself and contracting it out all in one shot comes with a large bill.  

It’s crucial to ensure that your cash reserves can cover not only the mortgage but also unexpected expenses during the remodel.The 30% housing rule is a helpful guideline to avoid overextending yourself, and ideally, you should be comfortable with your monthly housing costs even without rental income.

What are others doing to add a sleeping space in common areas?

You want to make sure your lender understand this as  lot do not and you will waste a lot of time if you are trying to borrow more then what you purchased the house for. 

Excited to hear about your journey back into real estate investing!

You can also buy the Lease package from BiggerPockets located under MANAGE PROPERTIES.I recommend tailoring your lease, but I wouldn't get too excited about it until you have some experience. 

I have seen 20-30% on 2nd liens in the past, not uncommon - especially if its a wonky type of deal (not your standard single family but land, development deal etc).I have started seeing some who have 30-50% 2nds from HML on single families. 

Best place to start is reading up in the forums, buying a book or two, listening to the podcast and attending your local REIA.