His purchase price would $309,900.Both units are two bedrooms and one bath and rent for about 1100 - 1200 a month. 

If you can only add 1 bathroom or 1 bedroom to a 2BR 1BA SFR for a buy and hold strategy, which would you choose?

Yes.More useful living space is typically considered more valuable.However, if you convert an area into a 'bedroom' - if the sqft doesn't work for a bedroom, or the conversion isn't to code, or it just looks 'weird' that may actually detract from the value instead of increasing it.

The legacy lease provides internet, which we have provided and which works in the common areas of her unit, and which also works in two remote bedrooms (albeit not at lightning speeds) via a Wi-Fi extender that we provided as a courtesy.My business partner has tested the Wi-Fi in her bedroom three times, and has been able to connect and load webpages.

Regarding the rent, I just used the average rent for 2 bedrooms in KC (from rentcafe) and decreased it by $50.

In the other areas like bedrooms, I might paint them with the intent to upgrade to drywall a room at a time whenever I have a tenant turnover.

900 for a 3 bedroom there seems about right, and yes you should be willing to take sec. 8.

So I’ve recently came upon a great two bed room that’s 900 a month with utilities included.

I'm interested primarily in creative real estate methods to start (low/no money down, partnerships, subject-to, etc.), as I do not have much available capital. 

It is kind of a weird place in that there are only 2 bedrooms and small single bath but huge living room and decent kitchen, 2000 ft of living space with 1600 ft of attached finished garage.