Would you buy a multi-fam with an illegal unit?

[Brad E.]

Im in contract on a property that was listed as a triplex.  I have recently confirmed with the county that it is zoned as a duplex and is out of compliance as a triplex.

I think the zoning can be obtained with a $1500-2000.  I do not know what the implications are for insurance and or what other risks this poses.

I am considering going back at a much lower purchase price (as if it was a duplex) but my agent has already told me she doesnt think they will do that based on conversation with the seller agent.

In the end I think I can make the numbers work but it feels like I am assuming a lot of risk.

So right now I am considering a price that lands somewhere between what I am in contract for and what NOI from a duplex would value it as.

Just curious about the approach or lens others would use to handle this type of situation.  Thanks in advance.

[Pat L.]

@Brad E. NEVER believe it when they say they don't need to inspect it.

Best strategy, if you're really convinced it could be a good money maker, is to get the bldg., inspector on-board asap. Then again our bldg. inspector was replaced before we were finished & the new guy was the proverbial PITA. We also pulled in the Fire Chief to give us a candid opinion. If you do this & it's just a $500 fee for a no-fail variance & no major redesigns such as new $20k fire escapes etc you will be home free & have nailed a valuable legal triplex.

Good luck