Discrimination is 100% legal with the exception of protected classes.

I figured I could form an LLC to buy it, and protect it from the state so long as I do nothing to jeopardize the integrity of the corporate veil. 1.

It is sad, but land lording is a business and you have to protect your investment. 

If it's not in writing, it's not protected or agreed upon.Lastly and of course hindsight is 20/20, but do some research and education on a typical syndication.

To determine whether the property qualifies for protection under the “grandfather” provision would require more extensive research of the historical zoning maps and more information about the past use(s) of the property.It sounds like the particular lender you mentioned is going to require you to take some action with local government before they approve the loan (whether obtaining written confirmation that the property is grandfathered, confirmation of re-zoning, or perhaps even simply a letter from Knox County stating that they are not going to seek to strictly enforce zoning with respect to the property might suffice).

In an effort to provide some information for long term buy and hold investors to be more prepared, please see below:Happening Nationally:Tenants have refused to leave at the end of their lease siting uncertainty and high risk of virus.Tenants (apparently even with strong renter history) are stating the virus has impacted their income and are not able to pay rent, are asking for lenience.Vendors are less responsive to non-emergent maintenance due to fear of employees becoming sick.Property Managers have chosen to be less responsive to non-urgent maintenance requests from tenants to keep their team safe, similar to vendors.Showings have decreased or have been cancelled due to the fear of being in public buildings or other people’s homes, which might impact vacancy if this is longer term.Occupied unit showings have ceased for the protection of the tenant in place, the showing agent, and the prospective tenant.Some management offices are closing and requesting rent be paid in a different manner than visiting the office.Occupied unit inspections have been paused, unless deemed emergent.Be Prepared:Think through how you will handle some of these situations in advance and write our a process for it.Handle them consistently and do not favor one tenant over another.Be proactive and prepared so you can act unemotionally and with fairness for all.Be a Leader:Now is the time to show your team (vendors and tenants) that you value their health as much as you do your own.

Some will lend if they feel there is enough protection for their capital regardless of your experience.

Buying land is a way to protect your net worth.

Research the protected classes in reference to fair housing- any questions you want to ask that don't reference those classes is fair game. 

The realtor and lawyer probably know each other and the lawyer isn't protecting you.Beyond all of that, from a construction point of view: a property that is riddled with permit and inspection related delays will not be a good end product.