Non-permitted Rental

[Joe Rodriguez]

Hey Everyone,

I'm new to the real estate business and have been looking at different rental properties in my area and ran across a two bedroom house with two one bedroom rental units out back. I looked at city records and they only show the property as a two bedroom SFH. I know other properties in the area have a R2 zoning but this one is R1 zoned. The place needs some work so I might need to pull some permits which could raise some flags on the two units. If I were to look at this as only a SFH it's an ok deal but if I could fix and rent the two one bedrooms it would be a great deal.

Question:

1) Is there a way to get these two units permitted if they are already built or grandfathered into the deal?

2) What liability do I face if I rent them and they are not permitted by the city?

3) Will property insurance cover these two units with no permits?

Thank You,

REI_Joe

[Account Closed]

The great thing about being the buyer is your cash is good on any deal. Hence you can always move to another deal. The seller does not have that flexibility.

If you are buying the seller's problem make very sure they are paying you to do so. Never take on this problems without a rich reward.

Pay for what they have today and never pay for what it might be if you put in the time and money. They get today's value. If they want you to pay for future value then tell them you will after they finish bringing the future into the present.

John Corey