And most will be able to pay the taxes when they come due, and put on a new roof, and put on a new coat of paint.As well as replace the carpets, cut the grass on a regular basis, replace the windows, reseal the chimneys when the liners crack, etc..It's unlikely that that these homes will fall into the slum category in 10 years or so, and make the asset underlying the loan virtually worthless.Or just vanish when the place starts to fall apart too much, due to no down-payment (no skin in the game 100% loans).Said the lawmakers who approved this.

Can we avoid any legal litigation here?

If you evict, how much money will it cost in legal fees, court costs, lost rent (because the tenant will probably stop paying), and vacancy while you prep and fill the vacancy?

The good thing about househacking a legal multifamily unit is that lender allows you to use the vacated units of 75% market rent as an income to offset the potential current mortgage.

I should have clarified some of the things you pointed out though as that is common practice buying a STR anywhere to verify what permits you need and how to operate legally in the city.

Hi Chris, I presume getting an attorney is the best option especially since some legal action of some kind will be needed.

In January 2022 the IRS legal department actually confirmed that what Im describing is possible (See CCA memo)!

It checks all the boxes to be legal - 2 egresses, windows, 7' ceilings, bathroom, full kitchen, etc. 

Your question is a legal question, so seek legal advice.

They will ask you a lot of questions about how things will be structured within the group and write up your legal docs.