Unpermitted Additions in Refinance Appraisal
Hello,
I recently purchased a single-family home in Hawthorne California, all cash for 500k using a hard money lender. The property was in bad shape and I'm using another lender to provide the repair cost of 50k. The home was initially a 3 bedroom 1 bath with a massive unpermitted enclosed den attached. I started the repairs and remodel yesterday and the plan is to turn 1 of the bedrooms into a 2nd bathroom and use the den as a master bedroom for myself. Repairs will be finished in two months after which I plan to house hack the property, the two permitted rooms will be rented out.
In order to pay the hard money lenders back, I will need to refinance the property. Will the fact that I have an unpermitted bathroom and bedroom massively nose dive my appraisal value? What is the impact of unpermitted rooms on the value if any?