We found two contractors and the bid we received to finish the work were higher than the bid we contracted to complete the entire rehab! 

It is important to note, people would rather rent a cleaner, and newer home, than a "larger."

@Collin Luckett  Just adding, if you have the ability to fund with your HELOC, it would be far cheaper than PML or Hard money. 

My son currently lives in the townhouse b/c he is going to school and works in the area.Since he is young and starting out in life, I would like for him to only cover the basic costs (taxes, HOA, utilities) just enough for me to break even (I believe that will put him slightly little lower than market rent rates). 

In The Millionaire Real Estate Investor, it profiles a couple who used this strategy.

Or is it more than that and not something to be done without development experience?

Quick search "MLS Only Broker California" gives you a couple of options.

The 8' doors are interesting.. dont get a lot of request for that other than front door.

Also, the houses that we like the most usually have the strongest appreciation.

It’s not an arms length transaction if your wife owns the selling trust that’s buying her parent’s property for less than market value.