The question comes with various customized details but it's the same answer over-n-over again, to such a degree that answer-burn becomes a very real thing. 

Using escrow company & title insurance will protect you from an unwanted surprise.

Would stay away from TX - have a few friends that were burned on the Dallas and also Austin markets... 

Quote from @Cassidy Burns: Welcome to BP! 

Burned my *** too many times lol.I am here to learn new strategies and take part in discussion regarding landlording and home improvement.   

The key is to understand the capital stack, who is in line in front of you and what are their terms.The people who are getting burned may have known there was debt in front of them, but did they know it was short term or variable - did they know all the details to make a good judgment on the investment.If a property had 20 year fixed debt at 70% would you take that over 3 year debt on a variable rate at 50%? 

Saika  While a permit is a hassle, what happens if there was a fire, it burned down, someone got killed and the fire department was not even aware the unpermitted structure existed.

So many people get burned by this and have no idea it is happening.

In the end someone who thought my tenant fully owned the property decided to burn it down for him.

Maybe it's burned to the ground.