One bedroom is decent sized, the other two are 9x9 kids rooms with small closets. 

Whenever there is a breakup of a couple or room mates non payment starts.

If it is just a room with bath, then you could just put in a fire rated door and keep the space locked off from the rest of the house.

If it's been on the MLS for half a year you probably have some wiggle room in that PP.

And we DO NOT allow automotive engine repair to be done in the living room anymore.

I have thought about other exit strategies, the biggest one is if I end up selling, leaving room to profit if I have to lower list price after repairing it and still make some money.

Is there room to increase rents by say $300 a month?

But with the mortgage payment being 800 it doesn't leave ANY room for profit. 

I do not rent to unmarried couples/friends/room mates.

It's in the same school district as the first house but much closer to campus (we live in a college town) so will be more appealing to renters, large enough to convert from 3 to 4 bedrooms and/or add a 3rd bathroom if we want to do so, and would be easier to list on airbnb if we wanted to rent out one of the rooms that way while we were also house-hacking with 1 or 2 long-term roommates.