She and my stepdad would continue to live in the house and pay for everything (e.g., utilities, mortgage, etc.).

Did you every find a 3rd party service or just continue to build your own?    

The first monthly interest installment of xxxxx due on or before April 15, 2024 and continuing in like consecutive monthly interest installments of this amount for a total of one (1) year or twelve (12) payments at which time the entire unpaid balance, including Principal, accrued but unpaid interest, will become due and payable.

That rent just isn't sustainable and tenant could be unable to continue to pay...or could look elsewhere due to it being above market.

Seems to be a great hold that'll continue to increase in value and the debt will be getting paid down.

Your definition is correct for "legal non-conforming".The "legal" part of "non-conforming" is dropped when it doesn't apply so most commonly people call these units "non-conforming", "finished", "in-law suite/unit", or "bonus unit".Non-conforming: Any property that doesn't meet current zoning requirements.Legal non-conforming: A non-conforming property that was lawfully established under previous zoning regulations and is allowed to continue its use.Based on his posts @Mario Morales is referring to a non-conforming unit.

It is also my understanding that this would result in large tax returns (from depreciation offsetting my other active income) that I could use to continue to expand my portfolio. 

After some back-and-forth an inspection was scheduled only for the code enforcement agent to... wait for it... wait for it... ghost my PM.At this point, I've advised my PM to communicate with code enforcement in writing as much as possible and to continue to document their no-shows, etc.

You would continue to defer all of the tax and receive potential cash flow until the market becomes more attractive for you. 

In fact, given the start up costs, the best way to make a profit as an MTR is to earn the continuing support of the property owner served.