@Kenneth C. as soon as legally possible change the lease so they are paying the water bill.

What is it legally zoned as?

My goal is to have every one feel secure in the partnership while also avoiding any unnecessary fees like legal, if possible.

Is it permitted?

Make sure you check with your local laws on what requires permits etc, in my area permits aren't required for roofing unless you have to remove more than 25% of the sheathing.

I didn't realize I needed to get a permit from the town. 

First off, most contractors are not that far behind as far as payments vs work done and they have legal protections to get paid if and when a problem arises via a mechanics lien on the property.

Assignment of contract is legal in most - if not all - states, however, to the best of my knowledge.Hope this helps.

Regarding apartments in back, do you recommend consulting an attorney to make sure the back apartments are legal?

I added in vacancy (10%), property management (10%), maintenance (10%), $1k/yr for Contract services, $750/yr for legal costs, I escalated the taxes, insurance and utilities by 3% (numbers provided are from 2017).