Most of them have been looking around Carmel and Indianapolis for both single family and 2-4 units. 

They want to do everything by the book, but don't understand the inspection process and don't want to invite an inspector to come over and throw the book at them.  

Some inspectors may eyeball the work performed and feel it is sufficient to sign off and yet others will ask you to open up the walls to ensure everything was done to code.

Kansas, Iowa, and Illinois are solid markets to explore, especially around major universities where housing demand is consistent.I’d also suggest looking into the Indianapolis market.

With that said, the inspector had no issue with there being a 3rd unit.

@Noelle MastelottoGrand Rapids, MI, Kalamazoo, MI, Detroit, Cincinnati, Columbus, OH, Cleveland/Akron, Pittsburgh, IN, Indiana, Rochester, NY, Toledo, PA, Indianapolis, and Rochester, NY are popular choices for house hacking due to their affordability, strong rental demand, and potential for house hacking.

Indianapolis Investors- what are your favorite neighborhoods to find fix & flip deals? 

I have even seen twice city inspectors walk buildings for other issues that have illegal basement units and as long as unit looks like a legal unit (normal ceiling height and two egresses) they didn't even say anything. 

Indianapolis/ Central Indiana Investors- do you prefer to invest in fix and flip properties or buy and hold for rental cash flow and longterm appreciation? 

Inspectors will check for leaks, sagging, or missing shingles, particularly in older homes.