Brandon Turner, co-host of The BiggerPockets Podcast, will teach you how to find, analyze, and finance incredible small multifamily properties, as well as the dangers to be aware of before you make any offer!

Please find one who is not afraid to explore the downside dangers with you--one who wants to help you buy five houses and not just one--one who is doing enough business to not ever send any sales pressure your way.  

The property is scheduled to be torn down by the city under the dangerous building code14.

Living in that illegal basement apartment is dangerous and I would think the Fire Code Official would insist that the tenant move out. 

Also, would it be dangerous to be highly leveraged (5% down) in a conventional loan and risk mortgage rates shooting up?

(They want to be able to have parties, smoke quasi legal substances, they want to have bbqs and a backyard to call their own etc) Also believe it or not some are still price sensitive (if they don't have an unlimited student loan or bank of mom&dad).My 3 Fanshawe rentals are all in this neighbourhood.

That definitely is entering the danger zone.  

It could be a number of problems like major foundation damage,difficult tenants and neighbors,dangerous neighborhood,etc.Just have to get in there and see for yourself.

its a classic sub too rip the rents scenario.. and why I personally think Sub too is extremely dangerous for the average seller.. there are NO assumptions any more.. banks dont' do that.your person who is on the loan has now got her credit trashed because of this.. they don't own the home its a nightmare situation.. of the first order.you would have to find the sleaze ball who bought the deal and get them to deed it to you..

Screening needs to be more targeted, and be capable of showing an actual connection between the type and age of conviction and the harm to be avoided by the landlord, such as credit risk, damage to property, or danger to other tenants.