The locks will be changed tomorrow, but I do not want any damage caused to the home since we're about an hour away and it's basically empty.

People run from fire damage, water damage, mold (although not as much as they used to), weird smells, former drug labs, and structural issues.

Also all sort of needs for furnished housing... corporate, nurses, construction, water damage, ...Hopefully your plan B will give you another 6 to 12 months to amortize your investment.LTR (long term rental) is your plan C.

3- Hazard/liability Insurance companies will likely take your money for the premiums for a policy written as a multi-family property, but then if tenants in the unpermitted space were to cause damage or someone got hurt, that the insurance company would refuse to pay because the unit was unpermitted or not up to code.

Lots of evictions and lots of damage.  

The things I am evaluating it on are:1) Durability2) Ability to hide small tenant damage (nail holes, small dents, ...)3) Visual appealAny feedback would be appreciated.  

If you have a fire extinguisher, a periodic inspection should check for of at least the following items:o Located in designated place.o No obstruction to access or visibility.o Operating instructions on nameplate legible and facing outward.o Safety seals and tamper indicators not broken or missing.o Fullness determined by weighing or "hefting".o Examine for obvious physical damage, corrosion, leakage, or clogged nozzle.o Pressure gage reading or indicator in the operable range or position. 7.

@Lois S.I have a sheet I give every tenant at move in that states the charges for specific damage.

I take issue with a tenant who reports a termite issue (which can do serious damage to your property) and then tells me I can't act until he's available. 

Somebody wanting to sue for you backing out of a bad deal or accusing you of selling them a property with defects like unknown termite damage).