I recently discovered may be able to receive funds elsewhere for the purchase.

You also risk:1) Committing mortgage fraud by misrepresenting the property and/or how you're using it.2) Exposing yourself to liability if the 3rd renter discovers they are in an illegal unit.3) Voiding your insurance.

So given the oppurtunity to inspect and discover this, you chose not to.

This cpa/real estate podcast has quite a bit of info on all the STR tax components https://podcasts.apple.com/us/podcast/tax-smart-real-estate-...

I hear of all these great profits that are being made investing in real estate that has a major “business” component, like small assisted living properties; rooming houses; sober living arrangements, etc.  

We in our lease addendum have language that the property is X years old and may require components to be replaced which is not uncommon and no rent reduction or hotel will be provided.

In regards to point 4), you mention the possibility of a tenant living for free indefinitely inside an unwarranted unit, due to the inability of the landlord to enforce rents, and the inability to perform an eviction.It's my understanding that if the Department of Building Inspection (DBI) discovers the unwarranted unit, it's possible for them to force the landlord by law to legalize the unit.

.- Negotiated Solutions: Worked with the seller's agent to determine whether the seller would address the violations or if you would need to assume responsibility, potentially negotiating a price reduction or credit at closing to cover repair costsWhy You Found Out LateThe fact that you discovered the POS violations only five days before closing suggests a lapse in communication or oversight.

We discovered during inspection that the hall bathroom has an alcove for a shower, but no shower installed and the space is too small for a bathtub.

I've been digging all day and discovered that their office address is a virtual location where they just receive mail there.