Since @J Scott said you aren't able to convert them to rentals I don't think that would work out for me.

The biggest flaw in my thinking that I struggle daily to change is the result of the intense training that schools gave us to trade time for money or, in other words, be an employee who makes money for other people. 

Also, how does it work out for you, renting out spaces in your home?

You will probably need to get conceptual approval/entitlement for the size of development you want to do and will work out all the utility requirements with the city during the process.

Although Texas has a 42 day minimum foreclosure time period for notice of default and notice of foreclosure, then trustee sale (*if* you time it perfectly), under CFPB guidelines you still have a 4-month work out period. 

An empty house can be more repair-intensive than an occupied one.

Not sure logistically how it will all work out though.

For the MIL might try getting her on a list for senior housing in case the rooming doesn't work out. 

I hope things work out!

Without seeing a specific deal @Michael Ealy, I would assume a deal with a project IRR of 40%+ would be a pretty intense project with a very high risk profile.