First step is to check with the city or county to determine if you can do what you want to do and what is required for all zoning approvals and the time frame, Ask if you have to install curb, gutter, sidewalks, street signs, street lighting or any other special requirements. 

With the COVID scare, stock market crashing a bit (for any savvy long term investor, who cares, but regular folk get scared any time they see red), election causing uncertainly, it is inevitable that people will look to sell their extra property, and also likely scare away half the buyers.

So, very soon I will have 'two on a lot' yet it is zoned R1 single family.

I then received an email saying the lease was cancelled due to an “red flag”.

Inspection went really well...and yes the house is old but no immediate red flags came back. 

We want to add a garage to a 4plex but the city has re-zoned the lot to SFR use and says our property is legal non conforming so we are not able to expand.i think a garage is an accessory that is consistent with accessory's for a house,  so it should be OK to my thinking, Is there a tact full way to approach the city with this?

Would doing something like that cause a red flag for the bank and extend the loan time?

Put it on Red 32  and hope for the best.

Maybe focus on the price per square foot and not so much on the zoning?

Turnkey is easy but growth doesn't happen inside our comfort zones.