If the kitchen cabinets are solid and have a decent layout, I find painting can work really nicely.

@Andrew McCotterI use magic plan for layouts.

The security deposit increases basis of the property (I get the tax advantage through depreciation but have to lay out cash to cover the security deposit) and the pro-rated rent was a reduction in the cost basis of the property.What have you all of done in these situations?

I ran into with a water leak is that if there is water damage on flooring, you may have to replace all flooring in that room or connecting areas depending on what kind of flooring you have, layout of the house, etc. 

I would lay out what you will and won't do and let them out of the lease early even if its not in the lease.

We hoping to make this happen within the next year but before doing so, me and wife would like to make some updates mainly renovating the master bath (same layout) and replace the carpets in the 3 bedrooms.

HML = $189,000 Closing costs $8,000 plus 4% for points $7,560. 6 months interest at 12%/year = $11,340.So, borrowing costs add $18,900Max offer price would then need to be 70% ARV $210,000 - cash deposit $21,000 - closing costs $8,000 - extra HML borrowing costs $18,900 = $162,100You end up roughly in the same max purchase price zone, but with the HML route you only had to lay out the 10% down payment.Buying with cash makes it delayed financing.

Don’t forget you have to add a kitchen and living space to the other unit, which can drastically change layout for you and is costly

That's probably a good place to start the estimates and layouts. 

So I made the conscious effort to fill my knowledge gap and lower my risk.