Also Airbnb does prioritize things like looser cancellation policies, instant book, in line with market cleaning fees, etc.

Do nothing...the tenant isn't renting that area and has no right to dictate how you use it as long as it poses no security/safety risk to them. 

I want to provide a safe, structured living environment for individuals transitioning out of recovery or other challenging situations.I’m new to this process and was hoping for advice on the following:How to navigate zoning laws and permits in Montgomery for this type of setup.Licensing requirements for sober living or group homes.Strategies for finding residents or partnering with local organizations.Financial and operational tips for managing this type of property.I’ve heard zoning can be tricky and want to ensure I comply with all legal and safety requirements.

Should I prioritize cash flow more and look into duplexes or other types of properties?

If you are set on prioritizing the BRRRR and cash flow you need to find a different market, but perhaps you are already in a Market A equivalent and there's an opportunity you're not even aware of. 

Use financing options like FHA loans or private lenders and prioritize local properties to streamline management.

I'd also prioritize expenses differently, easier said than done.

Since this was a safety hazard, he had to move out and decided to find another place to live.

Honestly, hiring a lawyer might end up costing more than the process itself, especially if things don't go in your favor.I’d recommend approaching the neighbor directly to discuss it, making sure they’re aware of the serious safety risk.

These are examples of how you could still be comparing apples to oranges focusing on safety and cash flow alone.