It's a drainage issue and when it "floods" it get a couple inches in some spots and quickly goes out.

It's a SFH but zoned for MFH and can be converted to 4 units.  

After selling that house, and converting pounds to dollars, we bought another owner-occupied house in AZ, a "pretty house." 

The changes we made included adding a 2nd bathroom by carving out space in one of the bedrooms and converting the family room to a 4th bedroom by adding a closet.  

First, i would not furnish the places, it will probably get trashed, let them get there own furnishings and make sure that the lease says they must remove them from the property when they leave. i would have them pay for utilities, to an extent - have them pay for electric, supply the heat but give them an allowance for certain amount of months ( especially if you have older furnaces and they run on oil heat ) if they go over then you charge them for it. i converted mine to gas with new furnaces, i include heat in mine, but i control the thermostat ( online, thermostat is locked at the house ). i also provide water / sewer and free internet.

I'm beginning to think long-term about what I want to do with the property though and someone mentioned to me the idea of converting it into condos.

I've read some articles online about how LA is cracking down on landlords who boot rent control tenants out and convert their units into Airbnb rentals. 

I am certain that your vacancy rate will rise if you install electric heat, if not now then in the near future when these larger trends in power generation kick in.I am acting on this right now; I have a highrise condo that I am in the process of selling for a number of reasons but right up there is that it has electric heat and cannot be converted.

That said, the price hasn't moved an inch.

If you get a loan as an owner occupant, you can't "convert it" later by paying toward principle.