Practicality of operating a nonconforming 3-5plex on Oahu

[Pavel Bennett]

Hi folks!

I see this a lot in the listings that meet my criteria: "Number of bedrooms/bathrooms does not match tax records. Buyer to do own due diligence. Sold as is."

I'm looking for a parcel of land that has structures on it with a total of 3-5 separate living spaces (each with a separate entrance and not connected to others via doors or otherwise) so that I can live in one and rent out the others (to long-term tenants). Typically, this is on lots sized 5000-7500 sq ft and zoned R-5. I will need to finance it using a conforming loan or a jumbo.

What are the risks of doing this? My concern is that I may at some point be required to stop operating it as a multi-unit rental and have to sell at a loss at a time when potentially many other landlords are in the same situation.

Thanks!