Direct communication with the builder has been the most effective method in my experience.

I rented to ACU students and used the rent by the room method.

I don't think the police officer was correct. 

Thanks That's correct, you've got it.

It really depends on what you are looking and I think your thought process is correct.

To choose the correct path for any particular business a number of questions need be answered first1.

Now that you have the correct terminology, you can search for lots of potential solutions. 

Quote from @Michael Smythe: @Sean Gallagher legally you are correct, but many tenants do NOT know this.We take over properties all the time and close 80% of existing tenants sign a lease with us.True! 

Having them deposit the funds in your account each month is the only other viable method IMO.

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.