But full cash offers have won me out.

You should get legal or at least property manager advice so if something bad happens it will not be a colossal problem.The zoning of CN-P includes live work and some commercial uses.

I'm looking for a lender that offers 5% and hopefully will do 100% financing.

Our detached garage is about 325 square feet now and half of that space was legally converted to a recreation room with a bathroom in the 80s.

And get a meeting with them and explain your situation and offer a payment plan..

HMM never heard of that regarding criminals  https://calcivilrights.ca.gov/wp-content/uploads/sites/32/20...Using CA as an example:- not allowed to place a blanket ban based on criminal record- are not allowed to access certain forms of criminal records (arrests, post-trial diversions, sealed expunged records)- you are technically allowed to access conviction data and use it, but your interpretation of that data must comport perfectly with how CA wants you to interpret it (must have direct bearing, must have been recent enough etc)- even if you follow all of this perfectly, accessing the criminal records must not "have a discriminatory effect" so if certain special people are impacted you are still looking at liability.As a result of this legal minefield many just decide to forget looking at criminal or to find some other criteria.

Your thought process on the contractor providing quotes to possibly "win" a job may seem correct on surface level as a lot of businesses offer "free-mium" products - but ultimately time is money, especially in real estate where good contractors are in high demand and could better spend their time finishing a project before accepting the next one. 

I appreciate you taking the time to answer my question and the insight you offer. 

My husband and I would like to propose some creative financing options...potentially offering a lease-to-own style option?

Lots of different information out there so if there are any legal experts here, would really appreciate your thoughts.