Honestly, it's too bad that the operating part of your dad's business does not carry with it some residual value of some sort with regards to that commanding a sale price.My hunch would be that this would be far too risky to embark on as a first go of things.Especially, from what you're mentioning this may have a large impact on the quality of your dad's retirement.If you have the funds and can structure something, the place to start would be to engage with an A/E firm to get a cost estimate generated for a concept building like you're mentioning. 

Whether good or bad.

I've had a very interesting proposition for a new on the market, higher end, flip property.....A buyer, due to personal issues, has bad credit - but cash in hand.

Personally I'm not sure that I would ever do it on my own residence, but it doesn't seem like a bad solution for rental properties where every penny is being pinched as @Mark Fries suggested. 

It wouldn't take much for this entire situation to go bad and end up costing you a lot.If the two units rent for $2,000 a month then a property manager will cost around $2,400 a year.

Not having a credit score is better than having a bad credit.

Raising the price is only going to work if the marketing of the property was bad, and you have now improved the marketing.

Note, regardless of choice the ARV would put us in the ball park of similar properties in the area.

Unless a tenant is bad it's much better for the owner to renew and the owner is who I owe my fiduciary.

@Anna BuffkinYeah briargate had put a real bad taste in my mouth for condos but I am glad to hear that not all are that expensive.