Most likely the windows will need to be changed to egress windows in bedrooms.  

The footprint of the home is staying the same but we are changing it from a 2 bedroom 1 bathroom to a 3 bedroom 2 bathroom.

There is no magic formula, but there are some interesting strategies he uses (nothing illegal), just some creativity involved to get to the front of the list, eventually.If someone doesn't want to sell today does not mean they wouldn't want to sell tomorrow. 

The house worked very well, I took the shabbiest bedroom and fixed the rest of the house up as I could.

You have a ton of options, but I think the most important is realizing that you should shift that equity to start working for you whether it be through sale, refi, HELOC or other creative strategies.

They are renting for $575 but where I am 2 bedroom 1 baths are going for no less that $800.

I am looking for a 5+ bedroom 3+ bathroom multifamily in a good school district.

She's the creative one, and I'm just the muscle. ;-) How did you find this deal and how did you negotiate it?

We use to host on Airbnb when it first came out (we were the probably the first of 20 ads in all of DC) & made some good extra $$ with our guest bedroom/private bath.

There are plenty of ways you can go about it, you just have to get creative!