Since this is a new venture, it may be wise (as Jon points out) to spend some time getting educated on a number of different strategies, and then choosing one that makes the most sense and can be executed with optimal efficiency and results.

Just get it out there if you are confident with the end result.

As a result financing has been somewhat tough to acquire but I have some cash reserve to do a few deals.

The result will significantly higher prices on everything, a lower standard of living, and a much worse employment situation.

He's sacrificing capital growth as a result.

However, the heated and gross square footage and number of rooms on the appraiser's website matches the information in the MLS ad, so I assume the county at least knows about this conversion, although I can find no proof that it was ever permitted.Has anyone here ever had any electrical or safety issues with tenants after buying one of these conversions?

Some forum search results (hand-picked by me :D )http://www.biggerpockets.com/forums/95/topics/59930-has-anyone-here-worked-with-afffinity-group-management-http://www.biggerpockets.com/forums/53/topics/41874-the-best-insurance-for-rehabbers

Trust me - if you call and broker and tell them EXACTLY what you are looking for, they will DEFINITELY call you if they have a property matching your buying criteria.... its what we do... phone calls and research all day everyday to potential buyers and sellers.

If you could get the lender to agree to a short sale, even if you have to accept a note for part of the shortage or bring cash to closing, may be the escape that costs you the least.I seriously doubt that holding onto this for three years and continuing to take your monthly loss will result in a net improvement.

That will get better results for you and the homeowner.