Purchasing a Property knowing that it is not up to code...?

[Josh Hooley]

I have an opportunity to purchase a local rental property.  It is a duplex with both units currently inhabited.  The property has been owned by a close, personal connection for quite some time.  It is one of the last properties in an area that hasn't been purchased by either the city to expand their park or by the business next door for adding parking space.

The offered sale price is $40,000.  At the annual adjustment in 2017, the property was valued at $34,900 (via GIS).  This is from a value of $3,000 for the land and $31,900 for the house.  I do not have the cash to buy it outright and would be financing some of it.  My intention with the property would likely be to hold onto it, while the rental income pays the mortgage, and then sell it to the business as they expand their parking.

The property next to the one I am looking at was purchased by the business next door.  According to the GIS, the neighboring property's details are:

• Lot Size: 0.1074 Acres -- this is 0.02 acres larger than one I'm looking at.
• Has detached garage.
• LAND Value: $10,900 -- this is $7,900 more than the value of land I'm looking at
• Transfer of Ownership (to business) date: 2004-11-30
• Sale Price: $87,000

One MAJOR issue that I know of is that some things in the home (i.e. plumbing and electrical) are not up to code.  My initial thought would be that it won't matter that much, as it will likely not be a long-term hold on the property.

My two main questions/concerns would be as follows:

1. Should I be very concerned with the issue of the house not meeting code?  Could there be a problem with getting financing (i.e. is it mandatory for the property to be inspected before getting a loan)?  Or could it cause problems with selling the property if the property is just being purchased for the plot of land?
2. How accurate is the property valuation that is listed on GIS?  Even if it is accurate, will I need to go strictly off the listed valuation of the land considering the re-sale I am anticipating?  How should I assess the value of the property?

Any input I could be given on assessing property values and how worried I should be about code would be GREATLY appreciated!

Cheers,

Josh