This move had many anticipating a crash in the CRE market, with dire predictions of banks collapsing under the weight of defaulted loans.

He doesn't have any signifcant savings (~10k), and his only income is social security and a small pension which comes out to a total of ~3k a month.  

I see people are getting a loan and investment capital to cover the property amount but then they drop 100k on renovations and they say they have $0 invested.

Have you looked into DSCR loans?

I have lots of cash now so no rush at all and current rate is 9% rehab loan on a tiny $155k balance so nothing too crazy. 

Building Codes and Permits: Insights on navigating local building codes and securing permits for this type of conversion would be incredibly helpful.Potential Pitfalls: Are there any common issues or unforeseen challenges I should be aware of when undertaking a project like this?

Granted i was in the process of rehabbing this when the rates started climbing up and i also had DSCR loan.

My numbers are kind of tight on cash flow due to a blanket loan (had to do to pay off lots of debt/rehab). 

So, I would have to get a small business loan, either privately or conventionally.

Another option is an actual commercial loan.