Seeking Advice on my FHA 4 unit purchase!

[Nick Laverriere]

Hello BP community! I'm so excited to be making my first post on here!  

I found a large 4 unit building in Portland ME, a fast moving market with very little inventory. I was impressed with the numbers on this building and was curious as to why it had been on the market for over a month.  I learned today that one of the 1 bedroom units is not legal due to lack of egress and the property has some management issues due to an absentee owner.  

My questions for the BP community are:

1. How do you suggest I deal with the illegal unit? Is this a deal breaker?

2. Will I be over-leveraging myself, making it difficult to acquire future deals with seller financing?

All of the numbers below are actual figures and the owner occupied unit previously rented for $1,000. Thank you in advance for the advice! I look forward to getting to the point in my career where I can give back!