Also, I believe there’s really only one PM company in the local Marquette county area that has a Real Estate license, which is needed to legally manage other peoples rentals in Michigan.

If you need financial help, ask under the "Finance, Tax, and Legal" forum.

**NAHB Contracts**: The National Association of Home Builders (NAHB) offers a variety of detailed and standardized legal templates specifically designed for the residential construction industry2.

Who would not want a legal, permitted unit for $8k or anywhere close to that (i believe the $8k is likely optimistic)?  

Having you live there, could put them in some legal trouble if it ever became public with what you are doing.

You paid 1% origination, closing, legal etc, and 4.5% interest.  

However, if they are still considered a short-term guest under lodging rules, you may have more flexibility, though the specifics can depend on local regulations in Seattle.Since this can become a legal gray area, I recommend documenting all agreements, payments, and communication with the guest.

I'm not a financial lender or whatever the legal term is. 

A "non-refundable deposit" is legally confusing.If they do request a showing, I send them this email:Hi John,Please read this entire email.How about a viewing on X at X pm?

There are occasionally opportunities for grandfathering if there is evidence of legally established conversions that were done previously, but no permit records exist to show it was done.