The homeowner insurance market right now is a dumpster fire with carriers refusing to write business and creating incredibly tight underwriting guidelines.

Haven't had any issues, but I am worried about liability should something happen like a fire. 

Some states are dealing with similar issues (wind, hail, fires, etc.), while others are working through some completely unique situations (like CA or FL). 

I don't think you are going to be able to get insurance for two separate living units in a single-family when they are both illegal and likely do not have the correct egress windows (basement) for fire safety which could subject you to huge liability if something happens to either party.

Compliance items such as adding smoke detectors, hand rails, fire resistant garage entry-door and new stairs outside.

. - Boutique hotels are on fire.

I just keep my head down and fire back.

I fire clients regularly. 

This may be to deliberately prevent discovery of other electrical issues or prevent fire/injury.You will need some form of hard money or construction financing to purchase the property as is, and you will need to get the property occupant-ready to pass an appraisal before permanent financing is on the table.

I am managing those and feel like I have been drinking from a fire hose.