Call the zoning department again, and this time ask specific questions: Is a variance required, or can you proceed as-is?

I just pointed out that at that time, the court suspended the requirement about a week before your post. 

When we create our business plan, we also include our exit plan.We'll only proceed if we can clean this up, acquire new tenants at higher rents so we can increase our NOI, which in turn should reflect our cap rate and profits.Since this asset class is new to us we will tread cautiously.Scheduled to preview tomorrow. 

Eventually, you will be sued and end up in court.

The tenants are currently in court with a title dispute so the house would have to be paid for cash only.I would like to convert it to a primary residence and turn the garden level into a separate two bedroom apartment for use as an in law suite.

If I understand you correctly, you got the eviction by the court.

This was on my to do list.See article below:Corporate Transparency Act Blocked Nationwide by Texas Court

If you proceed, understand you will most likely GET LESS for your property with a tenant as opposed to vacant.Why?

The landlord can then proceed with the eviction process in court if the tenant does not remit payment.

Multi-family properties many times provide a better return per square foot than single family, which would be to your advantage as well.As long as you're mindful of the reinvestment requirements and purchase at least as much as you sold and use all of the proceeds, you shouldn't have any issues with this strategy.