I will preface this with the fact that I have a legal background, specifically with estate planning and asset protection.

I even try to unsell them on the business by sharing my financial losses, litigation,  market shifts, permit purgatory, shady contractors,  clouded title issues,  paranormal activity, squatters, mold, etc.

I bet if converted BACK, it would be 4br+, probably a rather spacious 4br+: - a whole lot easier to rent given much more demand for such vs efficiency or 1brs- no longer competing in any way against apartments- no more utility issues, because tenants cover 100% of there own utilaties- no more headaches of wrangling different persons to play nice togetherAnd on and on and on...... 

They might only skim an inspection report and trust me to find issues.

Unless a property has a non-conforming use permit (NUC), there are only 4 areas on O'ahu that you can legally do STRS.  

We rarely have issues, but it seems like such a small investment in time and money to take one day to verify. 

Are there other legal or financial consequences I should be aware of?

This health issue ultimately led to a close family member passing and now I don't believe they have any family living in our area anymore.2.

As an example, we decided to replace the windows in a house we were renovating and ended up costing us $50,000 extra because we got into issues with permitting and suddenly found ourselves having to hire an architect, speciality contractors, etc.  

The other non-math issues I'm good handling myself.