Just realize that at the end of the day it is the Inspector's name on the line if something were to happen, so it is not a surprise when Inspectors want everything opened up to see what is behind the drywall.3) IMHO, the ideal option would be for you to get permits for an expansion and bring everything up to code using those permits.4) Lastly, if your ground floor unit is vacant, I would recommend keeping it that way.

I work with investors that are in your situation, more often than they realize it, with the same motives.

I know that in many cases tenants start looking when they get the increase and then realize that it is best to stay.

Quote from @Tchaka Owen: One thing I've realized over the years is to listed to what a politician proposes and attempt to extrapolate a realistic outcome.

Every cost adds to my basis in the property and the profit or loss is realized only when the property is sold. 

Many investors only look at projected returns and invest based on that, and therefore don't realize that the property is barely generating cash flow, because they are getting a 7% return day one.

I realized that I was slowly turning into a "Cash Buyer Employee," relying on a few cash buyers to take my deals—mostly due to speed and the certainty of them closing.

Most the time tenants will quickly retract their threat once they realize their escalation was met with another escalation. 

just realized I hadn't tagged you all!

I quickly realized I could not compete.