I think you need more income to make this deal work so I would suggest you convert the kitchen into another Bedroom, or better yet make it into a studio room.  

That would certainly drive off buy-hold investors, although you'd think some fix-flipper would have snapped up a 4,400 sqft. house and eagerly converted it.

One thing we need to work on is converting these non-desperate sellers as leads for our real estate agent to list.

Here are some numbers for you all:Purchase price: 78,001Principal Balance: 72800.18 @ 4.25%- 30 yr Conventional loan through BBT; The home was a foreclosure, but purchased the home from HUD through an online auction, and paid 5% down for Conventional loan with PMI.Monthly payment: 628.16Home owners insurance: 1034.68 (Allstate- Estimated cost to rebuild is 166,851)Current Property Assessment from County: 97,100 for building and 26,900 for land: Total- 124,000Zestimate (if this means anything): 123,382Square footage: 2020 with 1526 containing HVAC (Electric) and a converted garage into a carpeted room with window AC, 2 old wall heaters, washer/dryer/water heater, outside door around 494 sq ft.

Some people have found difficulty in getting an FHA loan for an LLC.Then you need to make sure with the authority having jurisdiction over that building if you can in fact convert the building to 3 separate living units.

Best case scenario would be to convert it to a bedroom. 

Since that will extend into the garage, it got me thinking about converting the rest of the garage space into a studio apartment.

Positives:Extra income.Today FNMA doesn't really care about non-conforming areas as long as LIKE properties transact in your market.Added income for a potential buyer.Negatives:Insurance - If destroyed you couldn't get it re-built.Possible fines or you could be asked to re-convert the home back to its permitted use.What happens if a tenant gets injured by living in a non-permitted area?  

If you really are looking for cash flow in the North Side there are some affordable apartment buildings not a 4 flex and they have all one bedrooms which you can convert into 2 bedroom units or 3 bedroom units as I have found many that are oversized and will allow a nice conversion.

@Princeton Washingtonyes broad sweeps, try to get as many as they can convert.