Have the main home on the property lived in by family and let friends live in the very small garage/room in the back.

You may have some negotiating room on the percentage. 

She asked me about it, so I told her I know they have a two bed room voucher, so she put one of the bedroom as home office room. 

Without comps and a credible assessment of the condition, it could be a grand slam or  possibly 80k over what you should pay.

@Joe S.Love is Grand...divorce is 200 grand

It may limit attic space, however you should have plenty of room for Airhandlers, Waterheaters, etc. in the non-living area of the home on the ground floor.

Can you use the vacancy and cash flow funds to make CapEx improvements like adding a room/bathroom, a second unit, etc and thus not pay taxes on that money for the time being?

@Samantha Springs can you rent a room out in the unit you occupy as your primary?

Because the last inspection passed everything the 1st time except the fact that he had clothes were on his living room couch thus inspection was rescheduled to ensure tenant cleanliness. 

Now they have pushed their hand on room prices and students are looking for options.