I need to house hack. I have just enough to buy a 2 bed/1bath fixer in Joshua Tree, CA. It has an unpermitted backhouse. I'm guessing, I don't know for sure, it might be a 1 bed/1 bath. Anyone have experience buying a house with unpermitted rear backhouse?

I've only viewed the property online but will tour it this week. The price is low enough for me think about my options.

Option#A Rent out the main house for prevailing rents. Leave backhouse alone.

Option#B The unpermitted backhouse would be illegal to rent out, however, what if I lived in the backhouse and rented out the main house? I'd section off the backhouse with a fence dividing the back yard.

Con

1. The house is on the outer edge of a 500 and 100 year flood zone. Mud flood last happened in 2011, 2013, and 2015 within a few miles of the house.

2. The house only has access to the backyard from a side gate.

3. Rental demand may be soft in the area due to cheap property nearby.

4. 

Pro

1. House is affordable

I looked at the house yesterday. It's much worse than photos online. The house has been red tagged by the city. The fireplace is collapsed, the roof, windows, HVAC all need to be replaced. The price the bank wants for this place is unrealistic. I would have to offer 40% of asking price just to break even.

It's my understanding banks don't accept much lower than 70%-80% of asking price. How low have you gotten a bank to go?