Now that you have the correct terminology, you can search for lots of potential solutions. 

HI, 
Is opening a LOC on my primary a good option to fund flips or is there a better solution to get the funding? There's no charge to me to get these funds except a yearly fee of 200.00. 

Thank you 

Quote from @Michael Smythe: @Sean Gallagher legally you are correct, but many tenants do NOT know this.We take over properties all the time and close 80% of existing tenants sign a lease with us.True! 

Verify and double verify with the applicant that the information they have provided is correct and that all income is verified and all adults will have a background check. 

I don't think you are going to be able to get insurance for two separate living units in a single-family when they are both illegal and likely do not have the correct egress windows (basement) for fire safety which could subject you to huge liability if something happens to either party.

Start early, raise that equity well in advance, and make sure all those forms and verifications are filled out correctly.

I just keep hearing over and over again to just take action and course correct from there. 

You're 100% correct, as always.

@Alecia Loveless is correct--tenants need access 24/7 to their electric service panel, water and heat, assuming those are individual utilities for each unit. 

There is correct, safe'ish ways to do things, than there is the "guru-told-me" golden-ticket EZ-peezy BS way's that will result in a lot of people with a lot of regret.