The house was up to code .

Pregnancy is covered under Fair Housing laws (familial status), so not renting to her (or treating her differently) because of her pregnancy would definitely be prohibited. 

If the homeowner has a material change in circumstances (transfer of title to his house) then he needs to inform his lender.

I started by house hacking several single family homes.

My investor bought it for 65k with the intent to gut the house and sell as a nice fully rehabbed 3 bed.

This increased demand and consumer spending during a time of extreme low supply, means prices go up.Remember, this is the third inflationary housing policy in as many months proposed by the federal government, all during an extended 3-year time period of high inflation, which is still near double the Federal Reserve’s target rate.

Do you doe them on primary houses only or also on investment properties? 

Many communities (like those on the OR Coast) are small and have genuine housing shortages and challenges.

Just a few thoughts...If the house is spacious enough where there is no need for extra private space, I'd say keep the garage.

I currently own one rental property in Fort Worth and own one house which I occupy in NJ.