This seems like a lot of work to save 15% of $35k in taxes (Less than $5k.) especially if you have transfer taxes or title insurance, or you convert your long term 15% rate in to your son’s regular income tax bracket.I hate paying taxes as much as the next guy but this lemon isn’t worth squeezing.

I assume you are probably losing a few of those bedrooms for living rooms, kitchens,  hallways, stairways etc. if converted from 2 to 3 units.  

You could 1031 out of the property, purchase a new one or something you might like, "Live" there for two years and convert the property to a primary residence. 

Convert the Property to a Primary Residence: If you live in the property for at least two of the five years before selling, you may qualify for the primary residence exclusion, which allows you to exclude up to $250,000 of capital gains ($500,000 for married couples) from taxation.4.

The BIGGEST mistake wholesalers make is diving into lead generation before you have anything set up to convert those leads when, and if, you DO find them.What is the point of trying to reach out to prospects when you have no system set up to convert these prospects into leads?

You can't really convert it to a rental property and then do a renovation as you will have no cash flow as a rental so I am not sure if you are trying to classify it somehow, but I don't think that matters at all.

Converting the entire property to a rental later allows full deductions but eliminates primary residence tax benefits, potentially increasing capital gains taxes on sale.

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.

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.