Looking at redfin history the prices have been going up rapidly 10-15%+ a year as well as rents up 50% from a few years ago.

This makes the home more accessible to a wider range of buyers, increasing its marketability and potential sale price.

If this isn't a separate dwelling unit you can't take losses from the rooms / space you are renting and use them to offset non-passive income (Section 280A of the tax code)Rental expenses are limited to the amount of your rental income and the balance of rental expenses is carried forward. 

Does the tenant expect crown molding and plush carpet for a high rent rate area or do you need to put in carpet that stands up to use and abuse??

My neighbor lives out of state and rents the property.

I'm considering adding a bedroom to each in the short term to pump up rent.

One try to find an out of state investor for it or two, I'd just drop the $250,000+ to renovate and rent it out.

Morgan just launched a new service called "Story" for rent collection, banking, tenant screenings, etc.

Proposal 1:  Sell well below market value and stay either rent free or very low rent while continuing to be responsible for all repairs and upkeep. 

We'll be listing our primary home for rent in about a year, so adding value to that (e.g. creating a 5th bedroom), and then qualifying for an owner-occupied mortgage in our next city could be a good start. - @Michael Dumler Hahah it was time for a pivot away from my full time job in tech anyway.