After 6 months of drama with my first investment property in TN - there appears to be no end in sight. My PM contacted me a few days ago to inform me the duplex, which is obviously a duplex, and has been a duplex for over 10 years was reported to city code enforcement by a neighbor. Apparently, a neighbor saw the property was being advertised as two separate units. They contacted the city about this and the city looked it up, sure enough, it's zoned for residential, not a multi-family unit. My PM is pretty confident we can get the zoning changed or a variance approved but it will of course take time. We have some creative solutions we can attempt to at least make the property financially viable in the meantime. I jokingly asked the PM if she had a family large enough who would like both units so we could rent it as one unit as stay within the current codes, and no sh*t an hour later someone contacted her asking if they could rent both units. So we'll see what happens. I can't fault (who I suspect contacted the city) as they have a nice rehabbed home next door and knowing the poor quality of tenant who was in the property prior to my ownership, I would be very leery moving into the future.
At the end of the day, I'm losing money and this will prevent me from refinancing the property which sucks right now. Happy I didn't use hard money or anything, although that extra layer of underwriting may have been beneficial in this case. I'm keeping my chin up though, and I'm glad the drama is happening now so I know what to look for, question, and avoid moving forward on future deals.
