Dream or Disaster ???

[Maya A.]

My business partner and I are considering buying a property that sits on a 20k sq ft piece of land. The house is 1600 sq ft and poorly designed but the owner updated as best he could so it is livable. He closed off one of the rooms and turned it into an efficiency that he’s renting in the back to a friend (couldn’t see it) and also turned the shed into a guest house without permits so he had to take it down and now its basically a tiny room with a bath. He is advertising it as a 4/2.5 but one of the bedrooms is a closet size that cannot be considered a bedroom. So main house is practically a 2/2 that we would live in for now.

He wants 650K for it.

The dream is to build 2 villas on one side, move into the villas, take down the house and build 2 more villas and eventually turn them into STRs.

My concern is I don’t want to buy the property and find out we cannot do this. How should we go about this?