How hard will it be to bet appropriate permits for the alterations (2 rooms and bathroom). 

In this couple’s case, painting the house white and adding a bedroom were game-changers.Prioritize high-impact areas like the kitchen and bathrooms, and add to the home’s curb appeal.

However, the bathrooms were outdated. 

The issue though as @Darryl Young and @Greg Kimura have said is that it's leaky in some parts, particularly this vent that connects to the tenant's bathroom fan.  

In my personal opinion, if I was renting a room with a group of roommates, I would want more than one bathroom for 4 rooms.

The vanity in my own bath is a higher grade cab with thermofoil, and the doors looks great but the painted cabinets are yellowed.

Try looking into zillow/Redfin and see what your potential rents you can get near the neighborhood by filtering the bedrooms/bathrooms of the intentional property that you are planning to buy.

So if the second kitchen has the sink backing onto a wall that has plumbing on the other side (eg another kitchen or bathroom) or it can be run from the basement up. 

The guest house is set up with a kitchen, bathroom, and then a large living room area that would double as a bedroom.

There are water stains in the ceiling, the electric needs some help in the floor two bathroom, as well as the water pressure in the shower.