He finished the kitchen demo and removing all the carpet including the tack strips.  

I don’t mind adding a new kitchen or bathroom but I don’t what to do the whole entire house again.

It seems that if you can find a good deal on the purchase price, are willing to do cosmetic updates (floors, painting, maybe a kitchen) you can get that 100-200/month cash flow.  

To get it homeowner ready would probably be another $8k for some kitchen updates.

Home warranties are basically like insurance for the house systems and appliances.

The help I have provided with a few home remodels has consisted of kitchen and bathroom layouts, flow and functionality, fixtures and finishes of the home, all while trying to stay within budget.  

Also the majority of those costs to covnert to a 2nd unit will need to be capitalized and depreciated, but some things (new appliances, flooring, paint, kitchen cabinets) can be shorter year assets vs. across the full 27.5 and IF it turns out that unit is > 50% you can use bonus as well on those items.

I usually recommend clients a pretty easy cosmetic rehab which is refinish floors, replace cabinets with modern white ones, add a white stone, new appliances, new bathroom vanity/mirror/light fixture and add in unit laundry. 

Its extremely important when running tighter margins like what you're talking about to focus on age of HVAC, water heater, appliances, roof, etc.

Anything smaller makes it harder to get them washed properly.Check out the Yale Appliance Blog - https://blog.yaleappliance.com/They cover all sorts of topics about appliances.