It's a combo of lack of supply (inability to rebuild similar units in a cost effective manner, deconversions, family-owned units that get passed down...etc), superior financing options compared to 5+ space, and just the simple monthly math compared to buying a SFH or renting. 

Since the entire region is trying to rebuild all at the same time, it is taking months to get vendors out to make repairs.   

Rebuilding entire floor/walls really only took a month.

Another only invests in tear downs and rebuilds.

Once we do the clean-out process, we will rebuild our rent roll with qualified tenants at higher rental rates.We have started the interior upgrade package and here are a couple pics of what we have done such as painting the cabinets, modern hardware, new flooring, new black stove and refrig, new lighting and ceiling fans, etc.I projected in my numbers a rent premium of $50 to $75 on the upgraded units.

The amount of surgery required just to convert them is pretty extensive, and in most cases for garage conversions like this, we recommend tearing down and rebuilding in the same footprint anyways.

If at some point they become damaged beyond a threshold (like 50% for example) then you would need a permit to rebuild the damaged unit, and when you go to pull that new permit THEN you'd be subject to modern zoning overlays and no longer grandfathered in.As to what to do with this information, I can neither confirm of deny anything above.Burn this after reading. 

The age of the home, and possible rebuild cost compared to Purchase Price is their reason for the high premium.

I am going to offer $300k on the basis that she has no Realtor fees, it needs new windows, and the basement apartment needs a rebuild (last tenant was an elderly lady/hoarder, no major damage, just filthy and needs new floors).My thought is that I offer a 30 year amortization at 5% with a balloon at 10 years.

Also, in the event of major damage, usually 50% or more, you have to rebuild to Current zoning.