Converted Garage into Master Bedroom

9 Replies

Hi All,

I am considering a SFR with garage converted into master bedroom. It looks like it was nicely done but without permits as county records show as 2-1 and seller claims it to be 3-2. Does anyone know how complicated is it to convert that unpermitted work and garage into living space?

If appraisal done - will they take into account additional bedroom or they will discount value based on unpermitted room?

If it's 3-2 and can be easily converted into living space then it's a good deal but if it's a hassle, pricey and won't change value then it'a bad deal. (consideration is being done based on buy-hold-rent-refi)

Any advice would be appreciated.
Thanks.

Hey @Sergey Perevalov , you're close to me. I'm about 10 miles east of Northridge! How cool is that?

Appraisers are a funny lot. They come up with some strange evaluations sometimes, but mostly they come in somewhere in the realm of realistic with the market. There's no guarantee what number they'll put on a property. That said, they are not supposed to considered unpermitted construction. If it's recorded as a 2/1, then it's a 2/1. This can work to your advantage.

Remember the appraiser is most important to the financier. If the house won't appraise, you have leverage in asking for a lower price. Use that. As an investor you buy as-is, where-is and how-is in it's current state and condition. That means for less.

If you can get the work permitted after the fact, your appraisal could go up substantially. Do NOT pay for what might happen, however. Let your seller know that you are taking a huge risk by buying without all necessary permits. Chances are very likely that you're going to have to rip up some walls to show the inspector that things were done to code. And, OMG, if things weren't done to code, even just a little, you may have to pay to demolish the existing work. Even the demolition requires permits.

While it probably won't come to this if this property is in LA city (for example, almost anywhere in the SFV), you will certainly need to construct a new garage or carport in order to get your permits signed off. Once the permits are in your property will be reassessed at the latest tax rates. The assessor is the guy you really have to worry about.

Originally posted by @Tom Mole :

Hey @Sergey Perevalov, you're close to me. I'm about 10 miles east of Northridge! How cool is that?

Appraisers are a funny lot. They come up with some strange evaluations sometimes, but mostly they come in somewhere in the realm of realistic with the market. There's no guarantee what number they'll put on a property. That said, they are not supposed to considered unpermitted construction. If it's recorded as a 2/1, then it's a 2/1. This can work to your advantage.

Remember the appraiser is most important to the financier. If the house won't appraise, you have leverage in asking for a lower price. Use that. As an investor you buy as-is, where-is and how-is in it's current state and condition. That means for less.

If you can get the work permitted after the fact, your appraisal could go up substantially. Do NOT pay for what might happen, however. Let your seller know that you are taking a huge risk by buying without all necessary permits. Chances are very likely that you're going to have to rip up some walls to show the inspector that things were done to code. And, OMG, if things weren't done to code, even just a little, you may have to pay to demolish the existing work. Even the demolition requires permits.

While it probably won't come to this if this property is in LA city (for example, almost anywhere in the SFV), you will certainly need to construct a new garage or carport in order to get your permits signed off. Once the permits are in your property will be reassessed at the latest tax rates. The assessor is the guy you really have to worry about.

 Thanks, Tom. 

Really good advice.

Permits aren't that really easy to pull over an existing unpermitted structure. you have to prove to the officials that the construction was up to code. In LA area, you will have to really ask the bldg dept on an "in case" scenario, and yeah, you don't have to let them know the address.

Originally posted by @Manolo D. :

Permits aren't that really easy to pull over an existing unpermitted structure. you have to prove to the officials that the construction was up to code. In LA area, you will have to really ask the bldg dept on an "in case" scenario, and yeah, you don't have to let them know the address.

Manolo,

the property is actually in Florida but thanks for advice.

Originally posted by @Sergey Perevalov :
Originally posted by @Manolo D.:

Permits aren't that really easy to pull over an existing unpermitted structure. you have to prove to the officials that the construction was up to code. In LA area, you will have to really ask the bldg dept on an "in case" scenario, and yeah, you don't have to let them know the address.

Manolo,

the property is actually in Florida but thanks for advice.

Same theory goes almost anywhere. Anticipate the worst, hope for the best.

From what I have heard, if you have rooms without a permit, technically at some point you could be asked to remove those structures by the city? 

Originally posted by @Paul A. :

From what I have heard, if you have rooms without a permit, technically at some point you could be asked to remove those structures by the city? 

 Paul,

it's probably possible but in my example the room was converted from the garage; not new structure.