Also, go after a bread and butter product (i.e. 3/2 or 4/2 not in a weird configuration for SFR).

The picture idea you posted adds awkward space in the living room.most town houses and apartment I see with this configuration in TN have a hb under the stairs.  

Could not find the current code right now:The code, in Section 13-196-490 providing rules for sleeping rooms in residential buildings, goes on to say: In every family unit and every rooming unit, every room occupied for sleeping purposes by one occupant shall contain at least 70 square feet of floor area, or if of original configuration need only comply with the regulations in effect at the time of its construction.

Rather than give up the poorly configured home (and it's legacy low tax base), were trying to figure out what options are available to keep the current home and then acquire a second home that is more conducive to someone with daily care needs. 

Comps for this property are tough because of the multiple unit configuration.

Had some issues with the upstairs bedrooms (configurations were odd) and the converted garage and yard (had a pool with a huge piece of junk deck).I got it for 62k, put in 16k in rehab plus another 7k in closing costs and hard money lender fees.

Checklist and document management throughout processing (configurable and ease of use for lender)4.

For your configuration, you could install a blower head in each bedroom, then one bigger one in the living room.

The neighbor has an identical configuration and installed drains so the water would go into the main drain of the house.

Helping to configure room expansion with walls removed and design help would be nice too.