Use some for buy and hold (I personally would prefer apartments rather than buying a few single family homes) and some for lending/trust deed investing.In either category, you must know what you are doing, know how to vet the investment, how to vet the sponsor (if investing in a larger fund of some sort), the laws and regulations on the lending side, how to investigate which areas to invest in buy and hold and notes/trust deeds for that matter.So as you have already said several times, lots to think about . . . 

Your definition is correct for "legal non-conforming".The "legal" part of "non-conforming" is dropped when it doesn't apply so most commonly people call these units "non-conforming", "finished", "in-law suite/unit", or "bonus unit".Non-conforming: Any property that doesn't meet current zoning requirements.Legal non-conforming: A non-conforming property that was lawfully established under previous zoning regulations and is allowed to continue its use.Based on his posts @Mario Morales is referring to a non-conforming unit.

We will continue to have an influx of transplants from high tax, high regulation states like CA and NY. 

I've seen numerous newer investors come to us for help after they've purchased a flip property in need of a massive rehab that did not know about the "FEMA 50%" rule.

The best asset protection is hiding your assets; second best is hiding your ownership identity behind numerous entities3.

I was referred to the lender by numerous agents and and investors in the area.

I was looking into the cities regulations and it seems like mid term rentals would work.

There's a to unpack here - preparing the property, pictures & listing, finding a management company, taxes, regulations for the area etc.

There will always be bad actors, you will never regulate malintent away.

Navigating NYC's zoning regulations can be complex @Jon Pflueger, especially in M1-2 districts, which are primarily designated for light manufacturing and commercial uses.