Refinancing a triplex that is zoned single family

[Joe Di Fonzo]

I have a question in regards to a multifamily property (3 units) that is zoned single family. The plan is to run a BRRR strategy on the property to update all 3 units and refinance to pull equity out of the property once it is renovated and rented. I am wondering how the fact that the property is non-compliant with it's zoning might potentially affect a refi and if there are liability concerns based on it's illegal use.

First of all in terms of an appraiser pulling comparables to help determine it's value, would an appraiser compare it to other 3 family units regardless of it's zoning or would they compare it to other single family units based on it's zoning? If they did choose to compare it to other single families the comparables still support a strong refi however I'm also worried that there may be a deduction on it's appraised value based on the fact that if someone were to walk into the property and want to purchase it as a single family dwelling they would have to invest money to change the configuration of the property to restore it back to a single unit layout. I also wonder if our income from it as a rental property would not be taken into account to help the strength of the refi given it's illegal use? 

Also on our mind is concerns with liability, in the event that something happens on the property of a serious nature (ie fire etc.). Assuming that we have met proper fire code and provided a safe living environment for all our tenants, which we always do with our properties, would there still be concerns around liability based on the simple fact that the property was not legally zoned for it's current use as a 3-unit property?

Any help on this would be great as our decision to buy the property is based a lot on our answers to these questions.