Hope that helps, and feel free to reach out if you want to dive into this more!

This could help stabilize home prices and create buying opportunities for investors and first-time homebuyers.

A particular strategy that may help you is to assume VA loans.  

At that time we could renovate the ground floor apartment and potentially turn it into (2) apartments for a total of (5).My questions come down to how do we deal with the existing 40k mortgage, whether we can make it work so her parents aren't paying much in rent, if anything at all, and whether or not we set up any legal entity, like a trust to help the legal situation of paying off her sister down the road. 

People tend to waste a lot when everythings included, so this helps to avoid that problem.There are also companies out there that can install a meter in lieu of doing a full submeter to ascertain how much usage the unit is using monthly.

Just taking a loan out on the property so that you can move your higher interest rate debt to a lower one will help some but not give you that breathing room that you need.

Networking with local investors through BiggerPockets, Facebook, and meetups can help you navigate the market, while avoiding common mistakes like underestimating expenses, poor tenant screening, and hiring the wrong property manager.Good luck!

@Natalie Kolodij was providing you with examples of services provided that would be adding to the convenience of the guest this they would be subject to SE taxes.The key question is are you just collecting rents (no SE tax) or are you adding services (there will be SE tax)Hope this helps clarify

My accountant was charging $100 each which I thought was a little high they are very simple if you have an easy platform .

Could help you save some serious $$ if buying and selling there and can also get you access to their MLS systems.