If you are following the rules then everything should be OK.This is no different than a health inspector visiting a restaurant.

When you posted your review, we assessed the unit to see if there was evidence of mold, urine or any other health hazard.

As they are in their mod to late 70's and in declining health. 

Have you calculated what your (monthly nut) is you need to survive business wise and personally?

Your personal loan has a 5 year balloon period.  

As long as there is no "healthcare" being provided (medicine, baths, etc) then it's not regulated by the department of health.

I have a salt water hot tub at my personal home.

It's usually best to talk with your neighbors about your plans and get their support as one of the variance tests is that the requested relief does not cause a public health issue or alter the essential character of the neighborhood.Try googling "tests for a variance in [your state]" and talk with your local zoning department.

The owner, a family member of one of our buyers, inherited the property through probate, but they weren’t equipped to handle the renovation.The house had been left in disrepair for quite some time, with the previous owner struggling with mental health issues.

Latest is prop 33.  3rd attempt to pass this with aids health foundation having spent mid $40m last I looked.