The problem is landlords punt things in leases all the time that aren't legal or don't conform to the landlord tenant code.  

Conforming 25% investment property financing with down payment funds coming via 1031 on a condo that we had operated as a rental for a number of years.

Or in the case of the photo below a hybrid (bottom story 14x36 Silvercrest 2nd story site built)Or in some cases, depending on setback requirements and existing legal non conforming set up and installation which is Grandfathered in, you can rebuild them from the frame up.

This means that if you want to add features that enhance the property but may not conform to the standard checklist used by appraisers, you may not receive the desired appraisal value.

Banks want low LTV.Credit Scores - 720 plus does the trick.Govt Rules - Freddy Mac and Fannie May buy up conforming Mortgages.

Called the city and they said it was "legal but non-conforming" and that permitting major renos could be a problem in the future and if one burned down we couldn't rebuild what would be a second living unit.  

He has seen a lot of stuff in his day and is one of the most knowledgeable people I know about real estate financing, at least from a traditional sense.He explained that almost all mortgage notes are written to conform with Fannie and Freddie Mac guidelines so they can be sold into secondary markets.

Your deal may or may not be in an area where the city envisions multifamily in the future.You can always ask for a rezone but many cities will need a better reason than just to fix a non-conforming property.  

That said, I am a firm believer that there is value in listed properties, you just need to find it...sometimes it surfaces as long days on market, or non-conforming properties, and functional obsolescence. 

A property that conforms to the 2% rule, but has really high expenses (taxes, all utilities included in rent, etc) may perform worse than a property that is under 1%, if all the utilities are separately metered and payed by the tenants, etc.Run the actual numbers, don't just say "hey, it's 2%, I can't lose here!"