I suspect the person who originally turned it into a fiveplex only applied for permits to make a fourplex and then did the 5th unit fly by night (perhaps at a later date) in order so the property would still be considered residential and allow for better financing possibilities.

And in many cases, I think the value in these properties is really down to land.Again, in my market, a mall that failed back in the GFC is now being considered to become the headquarters for Hillman.  

As already mentioned, he wouldn't be able to use rent from roommates to help qualify but based on the numbers you shared there should be a VA option available considering how much flexibility there is. 

@Regina Story consider vetting Xero, REI Hub and RentalHero.

It go with this provider until and unless resounding evidence of quality and customer service.

@Jimmy Rojas, a few things to consider with your plan:1.

Consider this scenario;You reach out to the tenant and decide to move on, you give them 60 days to move.

I'm by no means an expert in this, but you may want to check out the LIHTC if you're considering bigger builds.

I do wholesale or can custom look for something that fits your wants.

Considering it's from a reputable auction site, do I have decent legal standing if they misrepresent it?