The neighbor seems to think that the previous owner just added it without getting any sort of permits or approval from the city.

They are perfect for the starter homes that Habitat builds but would be of no interest to a typical for profit builder.I am not familiar with specific permitting costs and government fees for a new build but I know the costs in and of themselves are not a deal killer. 

I went to college, not that it is mandatory, and I got a business degree that emphasized real estate.  

This was my first place I bought after college, and my wife and I have been living there for the last 2 years.

,What I'm needing to know is how do I find out if these "converted" properties are permitted?

I was wondering if anyone new what it took to actually start one, what permits I would need and the type of land?  

What this means, is that there is virtually no inspection fees and very low permit/impact fees.

I know the city re-assesses certain neighborhoods once every three years or so, but I think since permits were pulled for my rehab, they will come after the taxes even quicker since they know work was done.

So as college savings investment, it has been great.

Are your room rentals still normal year leases (like to college kids) or are they short term rentals (like Airbnb)?