If you have unpermitted renovations and have it under contract to a buyer, they are going to drop the deal.4.

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However, about a week ago, I followed up, and the agent mentioned the price had dropped with no activity, and that the occupancy restriction would be lifted after 30 days on the market.I made a low offer, and after some back and forth, they declined but then listed the property on the MLS for less than their lowest counteroffer to me.

For non-primary residences, they have to follow all of the following rules to receive a permit: - the property must be a minimum of one (1) acre in size (designed as a precaution to disturbances)- The building standards of the underlying zone district must be met - Adequate parking is provided - Defensible Space requirements are met - Valid water and sanitation must be demonstrated - No more than five (5) bedrooms are in the dwelling As time goes on, they continue to become more strict on the rules listed above here, and are actively regulating it.

But, if you pay utilities, it might make sense to add a bit for the extra water / electricity.Personally, I would use this as an opportunity to tear up that 3 year lease. 

Can't include furnace, hot water tank, central ac and some other built-in appliances - check your local ordinances.

In industrial, my experience is clear heights, door count and size, loading dock access, and (probably not the case here) how perfectly level are the floors.I would also run a price sensitivity on how far rents may be able to drop to still make this worthwhile.  

Hello @Jordan Wisser,I agree with you regarding competition heating up if/when rates drop.

and of course a lot of DSCR loans are quote with a 5 year pre-payment penalty which of course can be VERY expensive if you have a 5 year flat 5% PPP and either rates drop or market conditions are such that you would like to sell the property. 5% of 300k for example would be 15k. 

When there's tenants already occupying the property, there's often times different leases that were signed among the tenants.Additionally, renting by room usually sees higher tenant turnover which in turn causes more work for the PM.Other challenges to consider:- Disputes/conflicts among tenants (different personalities if a tenant doesn't know the others prior)- Occupancy limits- Splitting utilities (what if someone uses more water?)