Grandfathered Triplex in UT

[Reem Khattab]

Hi Everyone, 

I have been stuck in analysis paralysis for about a year now. I finally found a triplex that I believe is the property I want to invest in. I have been successfully pre-approved for the mortgage loan using FHA. However, my realtor had a walk through and the tenants were not really prepared for it. There was a unit in which he found meth paraphernalia, and this particular unit is a 4 bedroom with a potential to make an office space a fifth bedroom if we add a wall. One of the bedrooms was locked and he was not able to see, it and felt concerned by what might have also been inside. Having meth in a property is against the lease of the seller, and has legal implications in the state of UT. Now I have to pay for a meth inspection to see if it is affecting the carpet, and ventilation. Next, the other unit has a good tenant but he has missing floor boards, and throughout the building the windows are broken or loose and not very good (losing lots of energy on heating).

The third issue, is this is an non-conforming triplex, so this building was grandfathered in as a triplex because they made the garage a unit. New properties in UT are not allowed to do this. However, that unit is detached and said to have a "new" roof, but the tenant in there claims to have leaking, and complains the sink isn't working (when you open the faucet the water sprays everywhere), and that there is water damage in that unit. 

The numbers: 

Unit with the meth group is renting for $1,100 but if cleaned up, and these guys evicted by the seller it can go for $1600/mo.

The unit with the missing floorboards is renting for $775/mo, and the current tenant is very polite and has very few complaints. His complaints were the floor boards in the kitchen and the fact the heating to his unit is controlled by the bigger four bedroom side of the home. 

The detached garage has problem tenants too, seems like its a family and in-laws, living together, lots of fighting and four children :/, and it is renting for 750/mo. 

This property has so much potential and my expected monthly mortgage with taxes and interest is about 1700/mo. I really want this property and make a fifth room and possibly rent out rooms as it was not advertised in the listing to have as many bedrooms as before. I believe this is a really great deal, but I do not know if I can as a long distance investor fix up this property properly, and not get into issues with contractors long distance and over charges. Also one of the unit with missing floor boards, the tenant bought his own washer, dryer, and microwave. So if he were to move I will either have to advertise the unit as not having those basic amenities or eat the cost and get those items and up the rent. 

My question is as a new investor, and this is my first investment property do I let this property go, and try and find a new property in the same area with less issues, or if the meth inspection comes back and it only requires the carpets to be replaced, I can ask the seller to fix those issues before I purchase. Asking price was 320,000 and we are under contract at 310,000. Do I let this go and move on? Or do I hang on to it???? There are tenants living in there and seem to be happy with the way things are, of course I would never agree to leave people in such conditions and want to start with fixing the windows. Help?!

Thanks in advance!

Reem