Here are the Fannie Mae guidelines for legally non-conforming properties:If the Property's characteristics are legally non-conforming, you must:ensure the Borrower executes the Modifications to Multifamily Loan and Security Agreement (Legal Non-Conforming Status) (Form 6275);confirm whether, if fully or partially destroyed, the Property's Improvements can be fully rebuilt to the pre-casualty condition per current laws, zoning requirements, and building codes; and if the Property’s Improvements cannot be fully rebuilt to the pre-casualty condition, evaluate if the as-rebuilt Property will support the Mortgage Loan at the current Tier, and document your analysis in the Transaction Approval Memo.To assess the Borrower's ability to rebuild Improvements on a non-conforming Property to a level that will support the Mortgage Loan at the current Tier, you should consider: conducting a threshold analysis to determine the resulting actual amortizing DSCR if the reconstructed Improvements cannot be rebuilt as-is per current law; the likelihood of a casualty event (e.g., wind, earthquake, fire, flood, mine subsidence, etc.); the percentage of damage to the Improvements at which the Property’s jurisdiction will require the Property be rebuilt to current zoning and land use requirements (i.e., the destruction threshold); which Property characteristics the destruction threshold percentage applies to, such as market value, assessed value, replacement cost, or unit count; for Properties with multiple buildings, if the destruction threshold percentage applies to each building, or all buildings as a whole; the replacement cost to rebuild per current requirements for zoning, and land use; the Property’s continued marketability, and economic viability; the amount and type of Borrower-maintained insurance coverage required per Part II, Chapter 5: Property and Liability Insurance, Section 501.02C: Ordinance or Law Insurance; insurance loss proceeds payout, compared to increased rebuilding costs, including from building code changes, Americans with Disabilities Act compliance, and the municipality's local zoning requirements (e.g., green compliance for new buildings, etc.); the sufficiency of estimated insurance proceeds from ordinance or law insurance and other coverages to repay the Mortgage Loan in the event of partial or full casualty, or condemnation; and for a Tier 3 or Tier 4 Mortgage Loan, if requiring execution of the Limited Payment Guaranty (Form 6020.LPG) would mitigate the risk of the as-rebuilt Property not supporting a Tier 2 Mortgage Loan.

This helps improve your return on equity (ROE) by moving your investment into a property that potentially offers better cash flow and appreciation.

While you can’t take bonus depreciation every year, you can take it in the year the property is placed in service or when you make eligible improvements.

It’s flexible and offers templates specifically for real estate professionals, making it easy to showcase your properties and create engaging content like blogs and resources.For the best results, working with an SEO strategist can help optimize the site, improve your search rankings and bring more visitors your way.If you have any questions or want to chat more about this, I’m happy to help.

While this would improve the cashflow and cap rate for resale, I'm wondering if it would shrink my market of buyers, since they could no longer use conventional financing as it would no longer conform to a 2-4 unit building.

My focus was not just on improving the property, but on ensuring it would become a desirable asset in the market.The Transformation:As the renovations wrapped up and the property was brought to its full potential, the results spoke volumes.

I suggest conducting a cost segregation study on both the acquisition and improvements. 

Councilman Eric Arias highlighted the substantial state and federal grants to improve infrastructure.However, residents voiced concerns about persistent problems such as a nearby wastewater plant's odor, inadequate lighting, and speeding trucks.

They build and invest to help improve the area, bring in better tenant pool, improve the economy and hopefully at the end of the day make a profit on the hard work, time, and money spent on that new development.  

For us there is a balancing act of improvements for guest experience, with functional improvements.