- Will we have to amend old tax returns or do it as a current year catch-up?

Quote from @Jack Krusinski: When my rental properties are in a situation like this, I make an effort to create a structured and aggressive payment plan to help tenants catch up.

Imagine if he does a perfect install job, but the unit catches fire anyway?

The permitting department is catching up on responses and we apologize for the delay - it was as if everyone was looking for updates at the same time at the new year mark and follow up questions as well.  

@Jonathan S. you'll get burned if you buy real estate rentals and do not, "manage your manager".Even the BEST make mistakes and no one can catch every mistake.So, it takes a team effort between a PMC and an owner to make it work:)

I understand wanting to avoid long-term commitments, but here’s the catch: off-market deals take time and effort to source.

So its a catch 22. 

You can only play games for so long.Chances are your next door neighbor is an IRS agent and turns you in when your tenants blocks their drive or some other random event disturbing your IRS neighbor.ADU catches fire and your insurance won't cover you, because it was an illegal and unpermitted structure.The city inspector told the last guy not to build or rent it, and is now pissed and wants to make an example of you and just red tags the whole property and no one can occupy for the next 1-2-3 years while you wait for a hearing.Then when you get the hearing, "staff" recommends you tear the whole structure down, and if you still want an ADU, you can apply for a permit and rebuild it.Your tenant quits paying rent and won't move out and you can't evict them, because there is no valid lease and they're just your "roommate".Probably a dozen other bad things can happen to you when you do stuff like this. 

Everything the banks do is for the reason of avoiding liability in case the borrower catches on.

I can also see where the CPA firms don't want to do this given for the CPAs...this is likely a one time large catch up project, and then never again.