Is a Triplex without building permits still a buy?

Question

I'm looking to buy my first piece of investment property out here in California. I've come across a Triplex selling at a deep discount. I've talked to the listing agent as to why it's selling so cheap, it's because the back 2 units, Studios, were built around 1970, and the owner at that time did not get permits for the addition to the property.

Would there be problems arising in the future for me after becoming the owner on this property without it's building permits?

Would I be able to get the back 2 units permitted after buying it through the city?

Thanks

N/A N/A · Answer

Thanks for your help. After seeing your reply, it led me to do a little bit of more research. You pointed me in the right direction.

I Googled the City's Building Department, after speaking with a Senior Builder he gave me insight as to the whole process on the obtaining my CO (certificate of occupancy) for the non-permitted 2 units. First off, contact the City's Planning Dept, provide them with the properties address, see how the property is zoned. One crucial piece of information the Planning Dept provided me with is that if the buildings are located anywhere within the property lot's "setbacks" (specific square footage adjacent to the property line), the city would not allow the buildings to be permitted, and could even order them to be tore down. Right then and there, that could be a deal buster. Now, if the two units were built outside the properties "setbacks", that would be ok.

Secondly, The Building Depts process is first to submit a floor plan of the units, anyone with drafting skills would be able to complete one. Second of which, have an inspector view the property, in order to deem it safe. Fee for 2 hrs of work, $250. The city will also impose a building fee, even though the units had already been built before you acquired the property, they'd have to be paid in order to have the units permitted. The fees are public information which I found on the Building Depts website, easily you calculate how much square footage the buildings are and you pay the building fee, for my case, the two units come up shy of 1000 square feet - totally my building fee to approximately $10,000!

All in all, the expense to have a building permitted would cost approximately $10,000 - $12,000. Good negotiating bit of information to present to the seller, maybe ask for a credit.

It's always best to do as much research on a situation like this where it could end up costing you thousands of dollars out of pocket. It's always good to ask for advice and have someone point you in the right direction. Thanks!

Jim Francis · Answer

Great information Ainjo.  I love that you went and found out that info.  It will surely help many thers here.  Let us know how things go on the property.

N/A N/A · Answer

The legal use of the property sounds like it is a single family residence. This means it can only be appraised and financed as such. Look the address up in the public record for LA county.

Richard Warren · Answer

You should definitely inquire about the permits with the building department.  You may be able to get them but it could be a hassle.  You will have a hard time getting financed without a proper CO (certificate of occupancy).  There could be penalties, fines and/or taxes due as well.  Do your homework BEFORE jumping on this one.

8)