It is cost prohibitive to install 3 new heating systems to separate them out and put it on the tenant (my first choice.) 

I don’t know the costs or effort to do all this in your area so it may be cost prohibitive.

The Fair Housing Act (FHA) prohibits discrimination in housing and housing-related transactions because of disability.

Nevada is considering not letting landlords consider previous failures to pay rent in selecting tenants  no late fees for 3 days, capped at 5%  hand delivered pay or quit by a constable and the pay to stay doesn’t have to include any late fees, just past due rent  Just change the name from Nevada to Eastern California already  Nevada law prohibits property owners from refusing to rent to someone based on factors such as race, religion and familial status.

Passed in 1982, the law prohibits tenants living illegally in former commercial or factory buildings to be evicted.Apparently, the intent of the law was to help struggling artists (not uber-wealthy celebs) living in Manhattan studios from getting tossed out for not paying rent.  

@Sean HarrisonIf you're self-employed, you might be eligible for a Solo 401k, which offers many benefits over a self-directed IRA: Compared to an IRA, Solo 401k contribution limits are roughly ten times higher.There is no custodial requirement for the 401k.You don't need the additional expense and administration of an LLC to have checkbook control.There is a built in-Roth component whereas IRAs are either traditional or Roth, not both.A spouse can also participate in the same Solo 401k plan.The Solo 401k has additional tax benefits over an IRA when investing into real estate using leverage.The penalties for prohibited transactions are less severe, though it's best not to utilize this benefit :)I'd recommend you reach out to a few providers who regularly post here on BP to get a better understanding of your options.

@Bob MaleckiSwap out would most likely be prohibited.

You can't sell real estate owned by your IRA to yourself (or any entity that you own) as this would constitute a prohibited transaction.

It could be possible that it was turned into a three family prior to the existing zoning laws that prohibit the three family use for that area.

You can also include in your lease an escalator to raise rent the second year unless you have a state or local law prohibiting such.