It sounds like you can not for any purpose since the conversion is not permitted.

I have started soil tests on 12 lots costing me a total of $5340 for the permits.

Perhaps they would make more money if STR was an option, however if that's not permitted in their location, no STR demand exists, or no STR PM is willing to take on their property, they may not have that option.

The economics do not allow for a property renovation, properly permitted and all deferred maintenance issues addressed.  

That's a spreadsheet that doesn't transfer to a real life leasing scenario because its not permitted within the zoning code.If the property is zoned RM1, then  perhaps you can lease to 8 unrelated individuals by converting the building into multiple units.

I know certain areas where I live are limiting those types of permits, etc.

A key step is also meeting with the City and/or all entities who are involved in permitting. 

I agree, I would be very careful doing anything that is not permitted or allowed based on the zoning. 

Costs like engineering and permitting can become disproportionately high for mid-size projects.Height and Density: Focus on areas where zoning allows for verticality and density.

Can you take it to the city to get it permitted?