Downside risks for a self-renovated rental

[Hong Gao]

Hi, this is my first post ( after reading several books, attending webinars etc). My realtor friend talked to me about a single family unit close to a university. The owner did quite a bit of renovation (WITHOUT PERMITS) and turned into a rental for college kids. Current income is 2500K a month. It has been a solid income source for the owner. Owner relocated and would like to sell the house. It was 1600 SF and now with basement studio the total is at 2400 SF. Seller can provide financing. My question is since the renovations were done without permits, what are my downside risks? What are the ways to mitigate the downside risks?