They live in a portion of the home which is attached to the part which will likely require demo (they do not have access to the demo portion).How do we go about this? 

"attached to the ground." 

Typically they are attached to a light switch style disconnect and they can also have 1 or 2 thermostats wired to them. 

It basically just attaches the purchase agreement to the property, so it would come up in a title search if they try to sell it to someone else.

Our goal is to create enough passive income so I can eventually quit my day job, and work at purchasing more income properties to further increase cash flow.I realize my expectations may be a bit embellished, but we needed to start somewhere.We're quite new to the scene, and would appreciate any and all feedback!

The downside to selling is I'm attached for other reasons it's a unique, one of a kind property-- and it's my SHTF option.

@Janelle Penner try looking for single family with an ADU, attached or detached unit that is zoned to be able to rent the other unit

See attached pics! 

Some of those are attached to the house, so if the tenant doesn't pay, you are on the hook. 

I added more living space by adding the attached garage as a bedroom and moving the access to the upstairs bedroom to the outside deck.