I know what seller financing would involve in regards to me (the buyer) having to pay a interest rate set by the seller and the monthly payments also set by seller.But what are the benefits of seller financing a property?

Hypothetically, if I found a property with strong rental demand, the income could cover loan payments, operating expenses, and generate a modest positive cash flow.While this example involves upfront risks, the idea would be to leverage my father’s expertise as a contractor to minimize renovation costs, boost the property’s value, and create a long-term asset that appreciates over time.

Its doubtful that the municipalities involved would sign off on a condo conversion or subdivision, as their aren't many rentals in the area.

Closing CostsMake sure you also budget for closing costs, which are a collection of fees and payments made to the various parties involved in your transaction.

You have to purchase at least as much as your net sale and use all of your net cash.If the scenario involved a $450K sale. 

Got insurance involved and use that money to remodel the entire inside, and add a new roof.

Are they given a JV-co-GP position for fundraising or will they be involved in the management of the property?

There's many other options in real estate such as syndication and note investing depending on your level of involvement. 

I’m weighing two options for our housing situation and would greatly appreciate your advice, given the complexities involved.1.Renovate and Buy Another Property•Invest to renovate our current home adding a bedroom to the house given our family outgrew the house.

The easiest of all the thing I've been involved in.