I'm willing to alter the space but concerned about doing it before locking in that first smaller-space tenant.

I don't know if this would potentially violate some safety code (I can always ask my rental inspector). 

If you take the time to consider all of this at the beginning, you  will be able to most cost-effectively alter your business organisation as your grow and will be less likely to box yourself in.

This is where a good attorney can help you out but you can learn some buy digging into your state laws and codes.

Try this site for a down and dirty way to find cash buyers in a given area.http://www.findcompsnow.com/index.phpAdd the area code you're interest in you'll get a list of recent purchases made by cash buyers.  

However, when I tried to do it again, they (Fannie and Freddie) had altered their guidelines such that I could no longer qualify for a conventional investment property loan, even though I make $60K a year, live at home, and have no debt.

I've got 2 different buyers out of Boston this month and my "pitch" to them if you can call it that was if I were an out of towner and coming in I'd spend more money and invest in a more conservative location then gave them zip codes to start doing some research on their own. 

The city has a strict inspection policy and this place is up to code.  

On the listing/area, 85713 can be a pretty challenging zip code and for a 2bd1ba renting at $500, the tenant pool also quite difficult.  

Not a chance, that'll barely get the thing up to code most likely and that's being optimistic, forget upgrades.