Zoning issue

[Aaron Carter]

Long story short...

Found a property that used to be a large foster home, currently vacant. Seller is from out of state. The floor plan is perfect for a triplex after a modest remodel. Currently a 10 bed, 4 bath, 4500 square feet. I know the rates for rentals in this area and feel that I could get $1200 for the 4 bed 2 bath unit and $900 for each 3 bed 2 bath. Oh, and it is in GREAT condition, requires very minimal cosmetic work. Would need to install one kitchen.

List price is 139,900. I think I could get it for $127,000 but will assume $139,900 purchase price.

Assumed with 8% vacancy rate:

20% down and $10,000 in improvements.

Estimated NOI: $24,540

Cash flow: $17,330

Cash ROI: 41.78%

It is a great deal with a great return, so I anxiously drove to the city office to find out more information about the property. They explained to me that it is not zoned multifamily therefore I could not separate the units or consider a variance.

However, they were kind enough to give me a few options... I could rent it out as a single family, start a charter school out of it, or rent out one unit and use the rest of the place as an in-home day care as long as one of the tenants was employed at the day care...

So they would let me put a SCHOOL there but not put up three walls for a multifamily...

I live in a rural area and I do not see any other use for this property. So it will likely sit on the market for quite some time vacant...

Looking for some advice or simply someone sympathize with my frustration...