While doing search for investment property, I guess I went too far and decided to convert my own (current) home into rental and bought an old property which needs to be torn down and built from scratch.

You need to live in it for a year, but after that point you can convert it into a rental.

The seller converted into 2 small apartments.  

If they did they would get with a friend and buy a property ($8K will get you about a $250K property with a 3% down so any guesses why that segment of the market has zero inventory).Finally as time marches on, Some of the older units will be converted to Condos and sold off to meet that demand which will in turn deplete the availability of for rent units. 

To make it more appealing to potential buyers after the rehab the property should probably be converted to a single family 3 BR, 2 Bath home. 

Don't try to convert them.

To make it more appealing to potential buyers after the rehab the property should probably be converted to a single family 3 BR, 2 Bath home.

I love the house as I lived in it for 7 years before converting it to a rental, but I think my cash could be working harder.I love the cashflow models of MFHs, and have decided I can probably get a 4-plex for around $200k.  

I bought a townhouse in 2011 and converted it into a 3 unit multifamily using personal credit.

You will have to convert it to investment first.