Evict them and eat the cost.

If the kitchen needs an upgrade or the bathrooms, or flooring then you could add value to the house and potentially cash out refinance or get a HELOC based on the new value and use that for more upgrades.

Also, maintenance costs are almost non-existent in the first few years as very little (generally) goes wrong in the first 5 years or so.

Here's my concerns:Based on down payment and closing costs I would have to pull from retirement accounts to make this happen.

(I sold a unit that I purchased for 485k about 10 years ago for 1.7m and did a 1031 exchange and used a little on the second unit)  Total carrying costs of approx. $8450 a month. 

It costs $18/mo per contract and $145 annually but is worth it at this level.   

I'm getting nervous that the area is eventually going to become unlivable because of the prohibitive cost of the insurance.

Hi all,I am looking at a potential rental acquisition where the home contains a garage conversion into a room and it is unpermitted.Note that seller has not included this room in the sq footage and i am not purchasing it with the assumption of conversion to permitted.If i were to buy and turn into a rental - is there any liability to renting it out with that unpermitted conversion?

Laws and deadlines are very specific and missing something will end up costing your time and money.

And cover the closing costs.