For safety purposes that would be necessary.

FHA 203(k) loans may be used for home purchases and renovation projects, such as installing roofing or flooring, bringing a property up to code by repairing health or safety hazards, or replacing plumbing or electrical systems.

Calling the city will help with this, but the city can always change their policy surrounding unpermitted additions, so they could say not to worry about it today, but force you to remove it 3 years from now.

Cash flow is so unpredictable hence I'd rather build in a solid safety net to take this uncertainty into account. 

Also, our number one service is comfort and safety to our dear future tenants, and our peace of mind.Third option is, just don't rent it, keeps the code enforcement away, and great lesson learned.Best wishes.

Example persons running SMLLC placing their properties in it, adding the SMLLC as additional policy holder on the current landlord insurance helps in those instances of lawsuits bit more.

They have a great short term rental policy.

That's awesome, a 24-unit could be a game changer for passive income.I can send you a due diligence checklist our team put together for multifamily and that might be really helpful for you (if anyone else is interested, I am happy to share with anyone who would like to see it).Here are good documents to gather / steps to complete during the due diligence process:- Appraisals- As-built construction documents (see what the build quality is and set up for electrical, HVAC, etc)- Easements- Encumbrances- Environmental reports and related correspondence- Government notices- Leases (with rent roll to verify)- Photographs - insist on looking at EVERY unit, otherwise you'll only see the ones the seller wants you to see- Previous site plans- Property surveys- Recent tax bills (can call the county to ask for an estimate on tax bills after sale)- Soil reports- Title reports, commitments, and policies- Zoning documents- Any other legal documents of significance that the seller has

If they are VERY professional, they will have their processes in writing as verification that policies are enforced equally and fairly by their entire staff.6.

Also, beings this is a rental property would you go with an umbrella insurance policy?