I have found that getting a heloc on my primary has been an issue when review w2s as my dti is over the requirements.

So flood insurance was required.

Managing the $20,000 to $30,000 renovation budget required careful oversight to ensure timely completion.

I did respond to that email with the specific section of state law showing the disclosure requirement.

However it would not be something clear-cut, so it comes with risks, restrictions, and it certainly requires a much deeper conversation than we can entertain on this forum. 

I make sure to keep the same rental criteria for everyone including credit requirements, eviction history, and criminal records to name a few.

The start indicates "Affirmative Habitability Requirement per 24 CFR 5.703(d) and NSPIRE Final Rule"Does that mean having a fridge and stove are requirements to qualify for Section 8?

Knowing you can do it the right way now, I would advise against it.If you convert it into a legal rec room, that would only be a half bath and the City may require you to have two covered parking spots (like a permanent carport). 

Some cities do require them to register and have insurance, but that is no guarantee of the work or quality.While many will fight you on this, my suggestion is to never pay up front. 

It usually requires a much larger down payment, like 50%.