It seems pretty clear that the numbers here don't make sense. And even articulating the need doesn't seem to be something you can do. You are living na construction zone, which you say you don't want to do, and maybe in 3 years you can bring in some very limited income, if you decide to rent it out?
I can't put my finger on it, but something about all your posts about this just seems off, like there is some other factor or you are trying to rationalize this for some reason.
You even said you are willing to spend $25k and it will probably be $40k. So it is clearly waaay more than you want to spend, and that is with numbers that I think are grossly optimistic. And you won't be able to have any income for 3 years (the point at which the bathroom and kitchen may go in), and it won't even be a particularly feasible space for visitors until then either.
It makes no sense and the numbers don't work. If you are doing this for other reasons, so be it, but I think you at least need to be honest with yourself that you are probably going to spend upward of $50k for whatever those reasons are, and then evaluate whether those reasons are worth $50k to you.
Also, if you are relying on this friend to get you from 80k to 40k, then that is a LOT of work from them (and you). before you start, make very, very sure this friend is willing to do all you are expecting of him or her, and isn't going to bail from this massive project partway through. I have some very, very dear friends, but I don't think I'd be willing to take on a huge project that ate up my weekends and free time for years, for any of them. And I certainly wouldn't ask that of any of my friends, because to me that is too much to ask. A few weekends of labor in exchange for pizza, wine, and hearty thanks? Sure. But you've outlined a 3 year plan here, and $40k+ in labor savings. That's a lot to ask of your friends. And even if they say yes now, that doesn't mean that at some point they arent going to realize that it's just too much and they need to tend to their own lives and other relationships.