And if anyone says a GC doesn't have nearly as much $ tied up into assets, lol, tell em they couldn't be more wrong, I had way more in tools and equipment then any 2 properties cost whole $ but when factor against just the capital outlay.... my shop and all equipment was roughly 12 if not 15,20 properties worth of "stuff". 

You may fix a house only to have your equipment and any appliances all stolen overnight.    

Even though you have an attorney, I strongly suggest you read through the tenant-landlord laws in your state so you're well equipped with enough know-how so you can intelligently talk with your attorney and strategize your plan of attack against this "tenant from hell".Whatever happens, don't give up. 

Now a landlord (and architect), I wouldn't build out the space without the second stair since it really is a safety issue/liability (especially in case of a fire) if anything were to happen.Full excerpt of building code below:According to the Chicago building code on egress requirements, the third story above grade plane within a dwelling unit [which in this case is the duplex-up unit], all the following conditions must be met:1.) the building is equipped throughout with an automatic sprinkler system2.) the floor area of the story does not exceed 1600 sq ft3.) the dwelling unit has an exit that discharges directly to the exterior at the level of exit discharge.Your third story attic space is unlikely to exceed 1600 sq ft, but you'll probably find the sprinkler system to be cost-prohibitive.

So rent for now.Own the debt until that balances--yes the underlying house price may go up, but that's fine you're also more equipped.

Before I purchase an insurance policy I wanted to seek some guidance on the best way to proceed.I received 1 quote so far for a HO3 policy that has 600k+ of dwelling coverage, 70k of additional structure, 450k personal property, 200k loss of use, 500k liability, and a few extras like equipment breakdown, water backup, service line.

By considering reasonable accommodations, taking proactive steps towards compromise, and being understanding of the perspectives of both tenants and Real Estate managers alike, Real Estate professionals are better equipped to handle such disputes in an amicable way.

If there are any concert venues, festivals or wedding venues within 30-45 minutes, list some of those two.I'd also change your phrasing of "our hot tub" and "our fully equipped kitchen." 

Many times they found they would put in new equipment only to have it stolen by one of the subs or workers.

I am risk averse and if I were to purchase, I would tear down to the studs and do a full rehab {this would include getting rid of asbestos shingles and insulation).1) I have done a ton of research and it appears as if getting rid of asbestos is very DIY able assuming you spend money on the safety equipment and use it properly.