I'd say based on the information you provided, in addition to Steve clarifying the caveat emptor nature of Colorado,  you would have zero luck in pursuing from my experience.

As a private lender, we specialize in providing funding options that could help you with your investment goals.

I mean depending on how much I needed it would have been an option.

Divide it out based on sqft. then charge the tenants accordingly like @Nathan Gesner mentioned.

I know month to month leases could be an option for the time being as well.

The contract shouldn't affect your basis, that will be based on what you pay for the property (unless there's some money changing hands outside of closing, which probably wouldn't be documented in the first place).

Some folks do well and others lose their shirt and go bankrupt.It is definitely a risk and you are creating a job for yourself, but judging by your wording, you kinda want a business instead of investing.It is scalable based on your area and how much risk you can tolerate.

Your only option now is to come up with the money to buy the place or come clean and admit everything to the owner.

If you need to talk about financing options I'll be more than happy to get on a call with you.Good luck!

If the landlord is paying any utilities that are based on usage such as water, then I might discuss a rent bump to compensate for the anticipated increase in usage and address that with the lease update adding the person as an occupant.