Non-permitted Rental

[Joe Rodriguez]

Hey Everyone,

I'm new to the real estate business and have been looking at different rental properties in my area and ran across a two bedroom house with two one bedroom rental units out back. I looked at city records and they only show the property as a two bedroom SFH. I know other properties in the area have a R2 zoning but this one is R1 zoned. The place needs some work so I might need to pull some permits which could raise some flags on the two units. If I were to look at this as only a SFH it's an ok deal but if I could fix and rent the two one bedrooms it would be a great deal.

Question:

1) Is there a way to get these two units permitted if they are already built or grandfathered into the deal?

2) What liability do I face if I rent them and they are not permitted by the city?

3) Will property insurance cover these two units with no permits?

Thank You,

REI_Joe