Survey: Your standard approach to un permitted additions

12 Replies

Hey everyone, I was just working on my company's standard operating procedures and wanted to run a quick survey for those of you who flip.

For homes that have un permitted additions what is your most likely course of action?

1. leave the un permitted addition as is, but ensure it is safe, and declare to the next buyer when done rehabbing

2. Work with the city to get the permits drawn up and permitted so the house is completely legit

3. Not even consider flip projects with non permitted additions

4. Return the house to original floor layout

Keep in mind, these are homes that you are going to re sell and not keep and hold in portfolio for rental. Thank you.

Steer clear of it, or tear it off and do it right.

For us, it depends on the property. It's either 1, 3, or 4, but never number 2. If the addition is in good shape, was done well, and matches the house, we'll leave it. If the addition looks shabby, either remove it or move on. The more the addition has impacted the house (or the more additions that were done), the more likely we are to just move on. If a garage was converted to living space, this will almost always be unconverted.

I will go with anything but #1, depending on the circumstances. Unlike @Mike G. I consider garage conversions a good thing, if done right. Garages in a rental tend to be collection points for all kinds of things, including gas cans, paint cans, oil cans, motorcycles, all the things you don't want inside your rental property.

#3 is only happening if we bought it based on less bedrooms, and included the demo costs.

Most likely is #2, but that would be location specific. Most places they do all they can to make it easy for you to legitimize someone else's midnight renovation. Other places treat it like you are trying to pull a fast one.

In general, I have been able to profit nicely from both disclosed and discovered unpermitted work.

Thanks for feedback everyone. @Mike G. , why is option 2 completely out? I find homes that I flip to carry a higher value if all the non permitted construction are permitted, so wondering why you don't do it?

I've gotten rid of every single addition or non permitted wall I've encountered, perhaps 5 or 6. Most were converted patio or garage space, or outbuildings. If the values were higher and the additions weren't crap, that would have been a different story. The properties were better returned to their original sf and floor plan. I am sure there are cases in other markets where keeping the sf would make a huge difference in value and would be worth permitting after the fact.

@CK Hwang It also legitimizes your work, which may be what increases the value. If you ignore unpermitted work, even when it is disclosed, others will question the quality of your renovations. That is why option #1 is the only one I would definitely rule out.

Originally posted by @CK Hwang :
Thanks for feedback everyone. @Mike Grayford , why is option 2 completely out? I find homes that I flip to carry a higher value if all the non permitted construction are permitted, so wondering why you don't do it?

Yes, it's definitely better to have a permitted addition, but it opens a can of worms. Was the electrical done properly? Probably have to open up the walls to find out. Plumbing? Same thing. Then when the walls are open, they find that the walls were not built according to code. Is the foundation proper? The roof? By the time you're done, you could have saved time and possibly money just tearing the thing down and building a new addition. In fact, you may end up having to do just that. For me, it's better to just plan on getting rid of it.

Thanks everyone, I see where all of you are coming from.

Originally posted by @Mike G. :
Originally posted by @CK Hwang :
Thanks for feedback everyone. @Mike Grayford , why is option 2 completely out? I find homes that I flip to carry a higher value if all the non permitted construction are permitted, so wondering why you don't do it?

Yes, it's definitely better to have a permitted addition, but it opens a can of worms. Was the electrical done properly? Probably have to open up the walls to find out. Plumbing? Same thing. Then when the walls are open, they find that the walls were not built according to code. Is the foundation proper? The roof? By the time you're done, you could have saved time and possibly money just tearing the thing down and building a new addition. In fact, you may end up having to do just that. For me, it's better to just plan on getting rid of it.

I agree, if it is a full addition. I'm just curious why you feel that way about a garage conversion. No structural or foundation issues there since that was all part of the original permits. Just electrical and HVAC, both of which can be inspected easy enough, and replaced i f need be without opening everything up totally.

Hi Walt, not sure how it is in Florida, but here in Orange County, in some of the cities a garage conversion to living area is a straight no from the city. Also a lot of the neighborhoods here have HOAs, even for SFRs, and the HOA would not permit a garage conversion either because of the parking issues.

@CK Hwang I am sure there are lots of market specific issues that effect such things, which is why I asked. Even when those issues don't apply to what I am doing now, I like to be aware of what possible problems I might encounter elsewhere.

I have not dealt with any garage conversions in Fla, other than encountering them by the dozens. But I have not bought any yet. Lots of unpermitted ones here, especially in the REOs.

Originally posted by @Walt Payne :
Originally posted by @Mike G. :
Originally posted by @CK Hwang :
Thanks for feedback everyone. @Mike Grayford , why is option 2 completely out? I find homes that I flip to carry a higher value if all the non permitted construction are permitted, so wondering why you don't do it?

Yes, it's definitely better to have a permitted addition, but it opens a can of worms. Was the electrical done properly? Probably have to open up the walls to find out. Plumbing? Same thing. Then when the walls are open, they find that the walls were not built according to code. Is the foundation proper? The roof? By the time you're done, you could have saved time and possibly money just tearing the thing down and building a new addition. In fact, you may end up having to do just that. For me, it's better to just plan on getting rid of it.

I agree, if it is a full addition. I'm just curious why you feel that way about a garage conversion. No structural or foundation issues there since that was all part of the original permits. Just electrical and HVAC, both of which can be inspected easy enough, and replaced i f need be without opening everything up totally.

Exterior walls of an attached garage do not have to be insulated, so they usually aren't. So insulating those walls is something in addition to electrical and HVAC.

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