With 8' ceilings you should not have to dig out the basement, and with an RT4 zoning, provide all other issues (egress, etc.) are met, you should not get much (if any) resistance to adding that unit.

An owner of the home is looking for someone that can provide some show money. 

They aren’t able to get a mortgage themselves so they would provide the money while the mortgage and deed would be in the others name.  

Paying off the mortgage can provide peace of mind and simplify retirement, while keeping the debt allows you to leverage your funds for higher returns through investments.

My accountant was lazy, not well informed and provided bad advice.

Simply have the tenants sign the new lease AND have them provide you with the additional $100 BEFORE you sign the lease yourself.

Everyone who Google's your name from here till the end of time can see you continue to lie despite actual tangible evidence being shoved in your face

That is a true portfolio loan with a commercial loan and through a commercial lender or bank that provides portfolio lending.

The reality is the opposite - if it's not in writing then the PMC doesn't have to provide the service or can charge extra for it!

Based on the information you've provided it seems like you might be targeting the wrong type of deal flow for your budget/risk-tolerance/area.