I am nevertheless trying to come up with a likely explanation for her "concern" with what your business prospects are.You see, if she were LEASING this building to you for your business venture, her inquiry would make PERFECT SENSE, and would actually constitute normal due diligence.

Consult your state and local codes to see what constitutes a legal bedroom for things like square footage, egress, and ceiling height (typically a factor in a renovated basement or attic apartment). 

Although the owner of the house is new, having just bought it, and the garage is also new, it's clear that prior owners of the house have used my parcel as their yard over the years, no doubt meeting the rules of adverse possession.Although the current owner only just move into the house and cannot meet either the 10/20 year statues, can they claim that the use of the yard for 20 years by one or more prior owners constitutes a valid adverse possession that is now handed down to the current owners?

*I am not an attorney and this does not constitute legal advice. 

I would set myself up as a contractor setting up the software for the landlords but would that still constitute collecting rent? 

A  maintenance budget constitutes the number of repairs plus turnover costs per a given time. 

I was thinking that the days the house is rented I could go back and stay with my parents, but I am not sure on what constitutes a house being your primary residency so you can get an FHA loan.

CONTRACTOR is not responsible for conditions beyond its control; resulting delays shall not constitute an abandonment of the work.

If an undue burden or fundamental alteration exists, the recipient is still required to provide any other reasonable accommodation up to the point that would not result in an undue financial and administrative burden on the particular recipient and/or constitute a fundamental alteration of the program."

Talk to an attorney or study your law to determine what constitutes "abandonment" and what you can do with his property.