The Village where the building is has now sought a demolition order for the building due to; smoke alarms, improper boiler venting, leaking gas lines to stoves, and leaking roofs over the front and rear entrances.

What's the custom for allowing, not allowing, charging an extra deposit for, or any special considerations, (or none) for the issue of smoking in your apartments?

And if you're having trouble leasing the unit, I would probably drop the restriction on being a non-smoker and just say they can't smoke in the unit (although they likely will). 

I have found good tenants in that price range to be a challenge, specially finding folks who dont smoke!

Getting any Joe blow will get you smoked.

The property could’ve been a smoking deal, from what i could see.  

I then swapped over to contracting with an emphasis on disaster response (fire/water/mold/smoke/storm) and general contracting, both commercial and residential.

They also smoke inside the units currently. 

If you know California, and you know Santa Barbara this is a smoking deal...I think it is at least.

You could also do Purchase and then Sale #1 and #2 (which is what I have done) but that adds a little more risk of being able to sell in time so only advisable if your purchase was a smoking deal.I'm sure you are aware, but total sales price of #1 and #2 combined must still be less than the purchase price to avoid boot.