I have had multiple long term stays without any issues, but I really need to ensure I am protecting myself.

In the event that it looks vacant, I close, and the squatter breaks back in (while I’m at work or having it tented for termites, etc) and claims they live there, how do I ensure that I have the right documentation where I can call the police to take care of removing them?

Don't overanalyze it, take advantage of the FHA loan with minimal down and ensure your tenant will cover the majority/if not all of your mortgage while living in the property. 

I trust this person but want to ensure we have an excellent legal document for any disagreement.

Two per shared living space would be more reasonable, although I would ensure a minimum of one per tenant if the 2 per living space standard came in lower.

By establishing clear guidelines, you can avoid misunderstandings and ensure that your tenants understand their responsibilities.📱 Use technology to facilitate communication.

Any specific terms that need to be addressed in the contract to ensure the IRS and FTB recognize the installment sale?

Thats kind of the idea of what I'm facing, I suppose I'd just really need to nail the due diligence part to ensure that it appraises appropriately.

I totally understand wanting to ensure having quality residents in your property, but I'd let them handle it until they give you good reasons not to.

@Alyssa Strom it sounds like I will be making lots of calls to ensure I’ll be able to get a permit; but hopefully as you stated lakefront properties may be more friendly to vacation rentals.