Should I buy and hold a SFH with unpermitted work?

[Mary Y.]

Hi All,

When searching for an out-of-state investment property, I came across a SFH with 5 Bedroom 3 Bathroom and around 2500 sqft which is currently leased out. The rent to price ratio and the neighborhood are good. However, the county data only shows 2 Bedroom and 2000 sqft. There was significant 2-story addition done to the house by previous sellers. The permit status is unknown. Assuming that the later addition is done w/o a permit, would you consider buying and holding such a property for rental?

One option is to make an offer based on the market comparable using the 2 Bedroom and 2000 sqft.  But I still have many concerns:

-any legal issues or void of homeowner insurance for the 3 bedrooms added w/o a permit?

-exit strategy: how many future buyers will consider buying this SFH when it is time to sell the house?

-there may be issues with getting the mortgage approved 

Appreciate any insights/comments. 

Mary