Unique Multi Family Property

[Matt Owen]

Hi All,

I've been looking for multi family properties in my area and had one come up that looks like it has good cash flow potential but its very unique and that worries me a little bit for a few reasons. I wanted to know what you all thought and get some feedback.

Check out my analysis spreadsheet here (if you like it please feel free to have it):

https://onedrive.live.com/redir?page=view&resid=90...

The property is in a very good area. its not the best street but its in a good part of town that I see having a lot of potential for upside in the future. I like that about it, However as I mentioned it is odd. Its a 3/1.75 main house with an attached studio apartment (rented). There is a 3/1 unit (rented) in the back and a freestanding 2/1 (empty) house as well. There is an additional 2/1(rented) unit that is attached to a small shop and a small 1/1(used for storage) freestanding building. This is all spread out on about 1/2 acre lot.

The owner when I took the tour was talking about them being permitted as non-conforming structures and as additional living space. I did some googling on that and found a bigger pockets blog post on the subject and I'm now waiting hear back from the planning department to get some answers to a few questions regarding the zoning and how that may limit me as an investor.

I'm worried by the non-conforming use structures and how that could impact the profitability of the investment and how units are designated "additional living space" as opposed to actual units. I am also concerned that the property will be difficult to sell in the future due to its uniqueness. However my intent would be to hold it as a cash flow property indefinitely. The numbers look good with some very conservative estimates. I can't get all of the actual paperwork on the property until I submit an offer. and that is without the 6th unit bringing in anything.  

Thanks for the help and I'm interested to see what you all think about this one!