4 Units or 5 Units: That is the Question

[Marcus Curtis]

Hey All,

I am working on a deal right now with an absentee owner of a 4 unit building... well maybe it is a 5 unit building. I am not certain. There are two units on second floor but on first floor I am still trying to decide.

Take a look for yourself:

Clearly, there are two 1 bedroom units on this floor. On the front side of the building though there is an "office" that has two 1/2 baths but no kitchen or closet in the "bed". There is a passage door along the closest exterior wall leading into the common area hallways. 

The rental license shows it to be "4 dwelling units + office (low-rise)" but the county is showing it simply as a 4 unit residential. 

Seller is currently renting the space out to a chiropractor on a month-to-month lease. I really do not care either way because if I can pull this deal together I will be converting the space to an additional unit which zoning will in fact allow for. 

With that said, I am hoping to finance this via FHA. What I am unclear of is what will the FHA appraiser/inspection would consider this unit? A commercial unit? Maybe as additional rentable space much like parking or storage?

Someone has had to have run into this before. Thanks in advance for your input!