Nonconforming Units on a Deal (?)
I was looking at this property that seemed like a good deal but I found it is a nonconforming property that’s listed as a duplex but actually has 3 units (a front, a rear and one detached garage that has been converted).
It has been on market for over 100 days so I know there is probably something wrong with it, so my two questions are:
#1 How much would it cost for repairs on non conforming units?
#2 Why does it affect the value of the property so much?
#3 What are the hidden expenses that come with non conforming units
#4 What are the legal implications of it?
For reference, here is the description:
“Three non-conforming units (front: 4 bdrms, 2 bths; converted detached garage: 1+1; rear: 3+1). The rear unit and the garage conversion do not appear in the tax assessor's sqft of 932 but have been in existence for an extended period of time. Stable tenants now on month-to-month. Tenants pay for all utilities. Optimal 5.22% cap rate, 15.50 gross multiplier. Property to be sold "as is" in its present condition, with no guarantee and retrofitting, subject to buyers' inspections. Interior inspection only after acceptance of fully-“documented offer, with current proof of funds, FICO scores, and prequalification”
Thanks to all who contribute :)