First property. Pls help me avoid costly mistakes before closing.

[Tor Lemhag]

Dear BiggerPockets members, I've signed a contract for my very first investment property. After reading countless books, articles, forum posts and just about everything else, it's time. The numbers add up, however, I would appreciate your tips on things I should look into during my due diligence period. Most of the books talk about finding the right investment. I think I have, now I'm looking for hands-on tips that should tell me whether to go though with the closing or walk away. I'm obviously doing an inspection, but looking for tips on things you wouldn't think about your first time around. 

A little bit about the house:

1. It's a single family converted into two units. 1st unit is on top floor, 3 bedrooms. The 2nd unit is ground floor and basement. 3 bedrooms also. 

2. I've inherited two leases, but they don't start until September (the house is empty now). There are 3 people on each contract (one for each unit). So six people in total will be living in the house. This is good and bad. The good thing is that I know it will be leased, starting September, the bad thing is that I cant influence the rent. The house is run down and I could get more rent by fixing it up. Is there anyway I can negotiate the contracts already in place?

3. The tenants are students as this is close to a major university. They might want to move in sooner. Either way I will have to find tenants before September. Maybe Airbnb.

4. There is a city ordinance limiting unrelated occupants to 3 per unit. I'm looking into this to make sure the house can occupy six people. 

5. It smells of gas in one in the kitchens. I'll have to look into this. 

6. At some point I'd like to convert the basement into its separate unit and a another bedroom to the first floor. 

Thanks for your help. No tip or suggestion is too small. As the saying goes, you don't know what you don't know. 

Brgds

Tor

[Brian Adzadi]

@Tor Lemhag

Everything looks good so far except for the gas smell in the kitchen. Try to get that investigated as soon as possible. The last thing you want is your tenants dying from CO poisoning.

When it comes to the city ordinance, you are in the clear. Remember what it states: "limiting unrelated occupants to 3 per UNIT". Your property is a 2 unit house. So for each UNIT, 3 unrelated people can live there w/o violating any laws.

Since the property was previously a single family that was converted to a 2 unit. Please make sure it was done legitimately where the town or city recognize the property as an actual 2 unit. Living in NYC, I have found some houses converted to multi-units but was never legitimately done through the proper channels and the landlords were fined hefty fees.

Don't get discouraged though. These are very minor bumps.