Write/obtain a very strict pet policy and have a lawyer review it and enforce it.

Mammoth is very strict about STRs - do some Googling about Mammoth and STR regulations.  

Take a read through your copy, you will find the answers to your questions in the regulations.

When a company starts running credit reports there are very strict standards in place that they must adhere to or they will loose their ability to run credit.

I would not say that the process of converting a garage in "simple" and that guide is just the super basic info that CityLabs puts out to help homeowners understand the basic rules and regulations. 

1031 is best way but strict rules.

Do you have any rulings or regulations that you could pass along?

For example, if you have a lot of cash reserves, they may not be as strict on the income requirements. 

New York State is strict, we have to serve a 3 day notice to pay or quit, then after 30 days of no payment we can serve a 30 day notice (before the first of the month) with a court date, show up to court and as long as all your paperwork is done properly the judge for file an eviction summons and judgment against the tenant that has to be served by a county Sheriff.  

Or would this be against FHA regulations?