Thanks for the advice but this management company is definitely licensed...don't want to call out names (yet) but they operate thousands of units in at least 4 states...they seem to value expansion over client and managers retention and constantly makes mistake or fail to follow up on issues...some of the staff like the contractor kickback feels very questionable and unethical.

Budget some extra funds for when they move out.This is what we use with our low income tenants, if it is helpful:HOUSEKEEPING ADDENDUMThe Landlord's goal is to improve the Highlands neighborhood and maintain a high quality living environment for all residents.

On the other hand, if the sponsor would like to achieve higher cash flow by renovating the property but has run out of rehab money, it may be best to sell it to someone else, get the profits out, and let the next person come in with a new batch of investor capital to upgrade the property and increase cash flow.It mainly depends on the cashflow and the sponsors’ cash reserves to be able to improve the property further or not.

Start by talking to them and explain that even with the warning, things are not improving and then serve them with notice to cure. 

Below is a chart showing the average reclassification percentages by property type.Apartment Building - 20-40%Conference Center - 25-35%Fitness Center - 22-45%Assisted Living Facility - 22-45%Golf Course - 28-60%Theme Park - 16-22%Grocery Store - 20-45%Hospital - 28-40%Auto-Car Dealership - 29-35%Hotels - 20-40%Research Facility - 22-45%Manufacturing - 20-40%Warehouse - 20-30%Medical Office/Clinic - 22-35%Resort - 25-45%Mixed Use - 20-40%Leasehold Improvements - 20-80%Office Building - 20-30%Retail Strip Mall - 18-40%Winery - 18-25%Restaurant - 20-80%Bank - 30-45%Are there any other types of properties you would like more information on?

I do like the peace of mind that comes with the knowledge that the work has gone through the official permitting process, as this significantly improves the odds that is was done correctly and will not be a problem later.I am wondering if it is a good idea or a bad idea to purchase a property with significant recent unpermitted work if I can get it for enough of a discount to have all the work inspected, fixed if necessary, and perhaps retroactively permitted. 

A lender might be able to use the rental income to improve your DTI and get you approved for a higher amount, though it may only be a portion of the rental income since its been less than 2 years.

has your credit rating improved?

Value-add - first 2 months improving the paint/decking/driveway/gutters/drainage/etc.

I mentioned this to my friend that owns the company and he suggested that maybe my new tenant would be able to make improvements as he previously did construction.