This is legal and will get the job done.

Is there a legal timeline to update current investors about a significant change in the investment?

Harassing your tenant on being late, when they are not actually late will end up with him having legal action against him.

Quote from @Kathleen Park: I recommend you educate yourself on "ordinary wear-and-tear" vs damages, depreciation, and your state laws.Do yourself a favor: buy "Every Landlord's Legal Guide" by NOLO.

Are the 2 bedrooms in the basement legal?

And of course, I should note that I'm not an attorney so don't take any legal advice from what I say.

I bought it off market at a great deal with a conventional mortgage as a primary residence with the plans to rent it after the 12 month period has passed so I can legally rent it.

That doesn't include legal fees and fines either. 

Can I currently legally conduct wholesale transactions in the state of PA without a real estate salesperson license?

Local Regulations & Market Conditions:In areas where vacation rentals are regulated or oversaturated, factors like legal compliance and market competition can have a bigger impact than ratings.