One of (if not the most) the most important aspects of any deal is mitigating risk. I

If you're thinking of this as a pure flip then it could be a good proposition, but as buy and hold you'll be working against the explicit desires of the city, which is never an ideal proposition.

Note short term would have selling costs eat much of the appreciation and thinking short-term appreciation is guaranteed is risky. 

Too much risk! I

Btw, this is the first time hearing an investor in Compton your competition might be low which might mean 2 things either the market is not good to invest or most of the investors are considering it risky.

It gives investors more confidence knowing that multiple people are involved because having only a single person in charge can be risky in case anything happens to that person.

I know seller financing and subject-to are ways but can be risky.

3) Is there any risk I should consider in pursuing such deals (I feel like it is a half backed potatoes).

Towns often are ‘one employer’ towns which is risky in that employers can downsize or shut down,often without warning, quickly lowering rents and raising vacancy rates.

There are a multitude of ways this would go wrong.Adding habitable structures and attached sq footage to dwellings with no permit is very risky, and your asking for nothing but problems down the road.