Purchasing Quadplex in LA; possibly will convert to 6 units

[Zachary Freeman]

In Los Angeles

Listing price $690k. I have offered $645k. 

It currently has 2 2bed/1ba and 2 5bed/2ba. 

The property was non comforming 6 units and the seller just converted and remodelled it to 4 units.  I may convert it back to 6 units; 4 2bed/1ba, 2 1bed/1ba; but the conversion would be non conforming so there are risks related holding the property like that. I plan to hold long term. Conversion costs would only be about 20k. 

I dont know market rent for the 5 bed units because they are an oddity. My range guess is 1900-2200. The 2beds will go for 1150-1300, and the 1beds for 800-950.

The seller acquired the building by auction and doesnt have any expense history or rental history. All units are currently vacant. 

I plan to put 25% down $172k on full asking, with a monthly payment of $2700.

Thoughts? Opinions?

Thanks

[Matt Devincenzo]

When you say "non conforming" is this legal non conforming or illegal (ie not permitted) non conforming? I ask because I have a SFR that is zoned "General commercial w/ non conforming residential use". Meaning it was a built as a SFR and at some point in the past the zoning areas changed to the area being determined to be a "commercial" zoning overlay. As long as it stays a SFR it is allowable, but were I to tear down or the property become destroyed only a commercial use rebuild would be granted most likely.

So now that the units have been converted can they still be converted back legally or have you now "lost" that prior non conforming use?