Rental Property Investor · Saint Charles, MO · Member since 2017 · 28 posts · 8 votes
Hey Everyone! I purchased my first rental, a duplex, in January of this year. After the tenants left last month I started the rehab process to bring the units up to speed and increase rents to market rates.
The scope of work increased greatly after conducting demolition as there was lots and lots of mold causing us to take the first level (the property is a split level) to the studs.
Due to some incorrectly installed windows/poor grade/foundation cracks the units have taken in some water which has rotted some of the framing(baseplates/studs). We also found a few pieces of framing from previous termite damage that needs replaced.
When I purchased the property the scope of work didn't include anything that would require permitting. However now that we have to replace some damaged framing (not a whole lot) I'm fairly certain we will be required to have permits. Along with this I have now decided to put a pass through window in a load bearing wall to give the space a more open concept feel.
I'm not entirely sure where to start however I have been warned by some others that the city inspectors tend to look for violations which can greatly increase the scope of work.
Let me preface this by saying I first and foremost want to provide a clean and SAFE place for my future tenants to call home but I would like to educate myself in how to manage the process to ensure its cost effectiveness.
Thanks to anyone that has some advice for a new investor such as myself.
Cincinnati, OH · Member since 2020 · 4k+ posts · 3k+ votes
6y
@Ray Jhala 100% get permits. A) buyers are getting more sophisticated so when you sell a rehabbed property, a lot of buyers are asking to see closed out permits. B) you are renting, so having a property that has been inspected and passed permits can help protect you if anything every happens. C) the amount of work you are doing sounds like it will cause attention. All it takes is an inspector driving down the street for some other reason and seeing some white vans out front to stop your job, make you redo work, and hit you with penalties (this happened to a friend a couple years ago). D)to be honest, there was probably work in your original scope that required a permit anyways. In Cincinnati, you are technically supposed to pull a permit to change out a faucet or light fixture. It is pretty absurd how little you can do without a permit.
Rental Property Investor · Boston, Massachusetts (MA) · Member since 2016 · 2k+ posts · 2k+ votes
6y
@Jonathan Greer this is true, and my reply came off as sharp at you instead of in general—apologies.
I think especially for someone who digs in and sees the work expanding, and who is hiring hopefully knowledgeable people instead of being one, it’s best to err on the side of the permit caution. Do something 100 or a 1000 times in an area and you likely know where the true limits of safety and legality are, but it’s often hard to distinguish that expert knowledge from careless attitude going in and a new investor puts themselves at everyone’s mercy by doing so
Rental Property Investor · Sioux Falls, SD · Member since 2015 · 9k+ posts · 18k+ votes
6y
"City inspectors look for violations" - correct that is their job and your job is to do the job right.
If you are afraid you won't pass inspection, that is exactly why you need a permit. If you are confident you will pass code, then a permit is no problem. Either way get a permit.
The fact that you are not even sure if you need a permit is bad. Call the city or county ASAP. In many jurisdictions, the second you start tearing out walls, you need a permit. Read building code, call code enforcement. Also be aware that certain work needs to be done by a licensed contractor by law. There is some special rules for owner occupied, but if it is an investment property even the owner can't do certain work. Usually electrical, gas and some plumbing falls into this category. The reason is that if you don't know what you are doing, you could literally kill someone with your mistake.
ANYTIME Electrical or plumbing upgrades are involved, you MUST pull a permit. God forbid you have an electrical fire or a pipe bursts. The Insurance companies are looking for ANY reason to deny coverage. I had an electrical fire at a condo - total loss. The insurance company refused to pay the claim until they finished their investigation (took three months). They investigated every upgrade/improvement I made during ownership; reviewed all permits; and attempted to shift blame to my contractors. Turned out to be a faulty connection in the new refrigerator. Learned a valuable lesson.....I pull permits when electricity and water are involved!
Rental Property Investor · Saint Charles, MO · Member since 2017 · 28 posts · 8 votes
6y
@Marian Smith Yeah, it's tough and all of the responses here are very reasonable. I think like some of had said here, doing it right is probably the safest way to go and will help build my knowledge base over time. Currently have no one I fully trust in my camp (i.e my own knowledge/experienced general contractor) so all this feedback is extremely helpful to me. Thanks for the tip, I had talked to a few others who had mentioned the same thing about not removing items for inspection purposes. Seems I have plenty more to educate myself in. Thank you for the response!
Rental Property Investor · Saint Charles, MO · Member since 2017 · 28 posts · 8 votes
6y
@Jonathan R McLaughlin In regards to your second post, I think you make some good points there about being the knowledgeable person vs hiring knowledgeable people. After every meeting with different tradesmen and women I would go home and google everything I could to verify the information. I've found it difficult to trust people to do the right thing and its caused me hyper focus on every detail to make sure I'm getting the right information. I appreciate the feedback and I think you're right to err on the side of caution until I've executed the process many many times over.
Rental Property Investor · Saint Charles, MO · Member since 2017 · 28 posts · 8 votes
6y
@Joe Splitrock Hey Joe, thanks for the feedback, I agree with what you wrote. I will certainly do more by way of educating myself on code and get in touch with the city and county. Thanks for your feedback.
Rental Property Investor · Saint Charles, MO · Member since 2017 · 28 posts · 8 votes
6y
@Randy Ralston Hey Randy, thankfully we aren't doing anything by way of electrical or plumbing but I definitely wouldn't dream of doing any of that type of work without having it done appropriately. Thanks for sharing your own experience about the electrical fire.I'm sure that was an incredible stressful experience to go through and I'm glad that it worked out in your favor. Thanks alot!
Rental Property Investor · Rockford, IL · Member since 2019 · 471 posts · 342 votes
6y
You silly entrepreneur, because you say the scope of work planned required no permits, you think that flies. No disrespect intended, but knowing the codes and regulations of your property area is a must.
You mentioned incorrectly installed windows. Suppose if THEY were installed with a permit and inspection the windows would have been more effective? Usually that's how it goes!
It doesn't matter if you don't agree that one thing needs a permit, and another thing may not. The reason the permitting process began, is to assure some sort of a common consistency in how structures are designed and built. Permits cost money, and repeat inspections can dig into your petty cash quickly. It's the cost of doing business, and it needs to be budgeted for.
It's best to get to know your building inspectors when you get into town. Introduce yourself, and explain what it is you will be doing in the area. Building inspectors have a duty to uphold area standards. If you attempt to circumvent them and are found out, you can be sure the costs will be much more than it could have been, especially if your project is RED-TAGGED with a STOP-WORK-ORDER.
The rule of thumb for permits is simple. Any changes to a home or structure requires permitting. In some areas even the PAINT must be permitted, as the color and hue need to meet the local requirements.
Now that you understand that Building Permits are required, what can they do for you? Why would you desire to be proactive in securing permits?
Permits document repairs or changes have been done on a structure. There is a dollar amount tied to the repairs, and tax rates are adjusted as the value changes because of the work done. This even includes removing a garage and perhaps not rebuilding it. When you sell the property, you will realize a benefit from the work done, Because of the permit(s). County records will be adjusted, and you will add value that can be documented.
I know people that have purchased property that had (extra) rooms built to the house, and that have even had garages 2' over a lot set-back line, only to have to remove these illegal repairs soon after the purchase. Imagine buying a 3br house with an attached garage, only to be required to remove the garage and bedroom because 10 years ago it was built without a permit. It happens.
THIS is why I check the county records against what is actually on the property I buy. At times certain things may be allowed, but only with a variance. That variance can take months to get, and that could be months of an empty house as you pay the mortgage, in hope the county will vote in your favor.
So, since you mention improperly installed windows, mold, and termite damage, I can agree that permitting should be required. I bought a house once that had to have a sign posted on the water heater listing that termites were found, eliminated, and the damage repaired. It had to be there for 10 years after the repair, and was a disclosure requirement to sell the house.
So, you got busted, and need to pay the man. It happens. Some get away with no permits all the time. I add the permits into the cost of the project. I don't go out of my way to get permits, but I do know that WITH permits, I can advertise that the repairs and improvements I did, WERE documented, and within local building codes.
As far as what some say about city inspectors, my experience with building inspectors is that an open dialogue with no attempts to hide shoddy work, leads to easier inspections for the future.
Rental Property Investor · Wayland, MA · Member since 2020 · 55 posts · 18 votes
6y
I just want to thank everyone for providing feedback on this topic. I just walked away from a duplex that had bedrooms that was converted from enclosed porches without permits. After reading this thread, I am glad I walked. The wholesaler told me that permits were not required because the layout was not altered (just switch out sliding doors with a wall) and that no actually square footage were added. But it was clear to me that the enclosed porches were not part of the original living area square footage and therefore the conversion counts as increasing the square footage. I also believed that HVAC had to be ran, but the wholesaler said the duct work was already there. I was concerned the county/city may fine the buyer and/or force the buyer to put everything back to where it was. But I didn’t realize that the buyer may also be denied dwelling insurance.