I was able to become financially independent in 2 years with two properties.

Seems like a messy situation. 

If it happens a second time, tell the tenants who are making the noise that they need to stop or they are in violation of the lease.This is solid advice and exactly what I would do in this situation.

Payment Terms & Renovation LoansA financial agreement is the backbone of any contract.

(We're not desperate to sell) With being new to the selling side, I'm curious what is standard for agent commissions in an off market situation.

It would definitely be fraud if this was the case, a recent post from an auctioneer talked about this exact situation, where they said the auctioneer was liable (different bedrooms/type of home example you don't have to read it) States would differ though and it doesn't seem black and white. https://mikebrandlyauctioneer.wordpress.com/2022/07/12/no-li...I do agree with you that it could very well lead to being burnt, however.

(Due to some financial issues with him in the past, I'm not willing to cosign for him)  Would a rental agreement with the roommates suffice? 

Hi Nirek - I deal with a lot of clients in your similar situation.

With permit, benefits are 1) get depreciation and other tax write off benefits since it’s a permitted investment purpose ADU, 2) probably better for resell value, 3) have a separate address and don’t have to bother sorting out mails for our legal tenant, etc. without permit; benefits are 1) no hassle to get the permit, 2) no permit fees, 3) no tax on rental income (as it is more like a “roommate”)Has anyone gone through a similar situation before?

A friend of mine in San Antonio had a similar situation.. she inherited a vague commercial lease and learned that the rules differ big-tiime from residential.