Plus it looks like you managed to gain a few inches in height too!

If you are trying to maximize space you may want to consider convertible sofas and/or one that has a pull out option.As far as material my preference would be a darker neutral color microfiber that would be easier to clean.Possibly most important is looking for one that is commercial grade for durability.

At the very worst case, as Alanna mentioned you could convert it to a LTR.

This means you can buy a SF and convert or build a separate unit.

I am debating about the converting the existing old gutted building to either multifamily building (6 units each around 500 sqft small studio) or mix of 4 residential and 2 retail/restaurant conversion (the back side of the property has Big enough lot for outdoor dining or any other use cases.Any recommendations for use case of pure multifamily or mixed of multi family and retail?

Rent would be ~$4500 for the new tenants and the ADU could go for $2-3k if we converted the garage. 

I think there's potentially a different feeling when you convert a personal residence to such an investment property versus purposefully buying an investment property. 

So yes it can work, but you also need to be able to convert the responses you get into closing.

Purchase price: $326,000 Cash invested: $19,900 Sale price: $460,000 Basement was already set up as another unit, so I bought furniture and converted it to an Airbnb while living upstairs.

To fund additional investments, consider side income, creative financing or creating a timeline with your co-owner for converting property B into a rental to generate cash flow.