You're increasing the need for hot and cold air dramatically and it's doubtful the existing system will be adequate.But, in answer to your original question - yes you will need a permit.

What I typically see investors do to get rolling is use a Heloc or cashout refi on an existing property to get the startup capital they need.

I had to pay them a $4,500 "commitment fee".

A lot of times it is best if the existing pm is the listing agent so they can negate this along with tenant communications. 

Whereas the majority of the existing clients have stayed with you, but the whale client is with the ex-partner leads me to believe that if this heads to any type of judicial setting that no damages would be awarded.

It's important to choose that one and commit to using it.

If you buy pre-existing, you'll still be looking at 400k or above.  

Patience can be your best friend and if you attempt to over leverage a property it can come back to hurt you.Some will recommend buying subject 2 where you could take over an existing mortgage that could be at a substantially lower rate - but if the lender finds out and calls the loan that could also be very bad.

PMLs exist, there's zillions of them, real estate investors work with them every day and PMLs fill a need and have a role to play as a specific tools for a specific situation.See if you can put a sharper point on your question.Mike Thanks for this Mike! 

@Brandon OrtizFrom my experience, choosing the right investment strategy means aligning it with your financial goals, resources, and time commitment.