@Kevin MartinI agree and was going to add everything @Mark Fries said.

There is bonus space in the back of the house we could put in another bathroom as well. 

How much work do the units need to be rentable spaces?

I peeked in the windows today, saw 3 prong outlets, an electric panel outside that looked like it had current wiring, and I saw PVC pipe in the crawl space. 

I don't see other apartments here  offered at low prices, at the same time they are sitting on the marked longer.

You won't have to file any additional form, but when you do your taxes your have to explain to your CPA that you did a 60-day rollover, he'll know how to property mark it on your tax return. 

There is plenty of space in each unit to make them each  4 bed/2 bath and bump rents to ~$1300. 

If the marked drops you buy .

They host a lot of public events and the public green spaces are beautiful. 

@Tim LemonsThis is one of the frequent times when I have to agree with @Dennis M. but I have different reasons this time.You're pretty much screwed on space in both bathrooms.