Have you looked the current rents and compared them with the area rents with for similar properties? 

In-law suites will not meet building codes due to safety codes for rental purposes.

Note the the law sees it different (they see an single member LLC as a different entity and hence you get asset protection...if everything is set up right).However, the IRS disregards the single member LLC for tax purposes.

Try to get extensive knowledge of all the DPA programs in your area not for guidelines but for product purpose.  

I would sell and try to find a comparable priced home closer to work.

@Omar Khan I wonder how in investing the 10-15% down payment in the S&P vs buying a place to live to raise a family can be compared.  

We didn't pay anything down and we got a rate of 3.6% which is hard to beat compared to a regular conventional loan.

Your realtor will run comparables of other similar homes in the area to see how much you should really pay, and will go to bat for you to negotiate repairs, closing costs, etc to get the best deal possible.

Purpose is rental for eventual refinance, then BRRRR.  

There is certainly more work to do when buying non-performing notes when compared to performers.