I am wondering if this area is 1) investable, 2) safe, 3) What is the long term outlook for this community? 

The way that things like this are typically handled is that if a lawsuit were to happen, since both people have been behaving under the assumption of a lease (the landlord renting their space and the tenant paying rent), they would probably treat it as if there was a standard month to month lease agreement.  

I wasn't aware of this until my lender ended up showing me all of these different options from a lender's view.

Specifically for PR we can help with certain DSCR situations with a 65% max LTV. 

This will clarify and reinforce what you are reading.

We intend to use this space as an office and or small sleeping quarters.

I want to continue to use this house as a rental.

Appreciate your take on this!

Do we get an attorney to write this up for us?

I wish I had a more helpful answer.You could try your primary insurer and see if you can add a STR policy with it.