When you flip houses for a living, you’re going to run into some pretty crazy surprises. Back in season two of our show, Flip or Flop, I found a house that I thought was going to be the perfect flip. I saw it on the MLS, and I thought it had to be a great deal, but we didn’t have much time. So, while Christina went to the auction, I went to check out the property. From peering in through the windows, I thought it was only going to need $20,000-30,000 in rehab, and the price was amazing. I told Christina to go for it. She won the auction, and we got the house. Then we got inside.
The place was a mess, but that’s really nothing new in our business. The biggest problem we found, though, was that there was an unpermitted addition. We suddenly had a much smaller house than we thought we’d bought, and we had a big decision to make. How were we going to deal with it?
What Does it Mean When You Have Unpermitted Construction on a Property?
First of all, if you watch Flip or Flop regularly, you know that we’re always on the lookout for unpermitted additions and construction. If the old owner of a property added a bedroom, sunroom, or anything else to the house without first getting a permit for it, as a house flipper, you absolutely need to know.
Why? Because, if the construction isn’t permitted, you can’t just market and sell it as-is. For example, if the old owners added a bedroom that’s not permitted, you can’t advertise that room as a bedroom. And if you have an addition that adds square feet to the house, you can’t advertise the additional square footage if it’s not permitted. In fact, in some states, you can’t sell the house as-is at all—you have to either get rid of the addition or get it permitted.
Find Out If a Permit Is Necessary
In some states, though, and with some additions, you don’t actually need a permit. If you have an unpermitted room or addition, go to the local municipal building and find out about the building codes for your neighborhood. If you don’t need a permit, you’re good to go. If you do need a permit for the construction, you have a couple of options.
Getting a Permit
Your first option is to get a permit for the construction. You’ll need to complete a permit application, and you’ll most likely have to have an inspector come out and either approve the construction or tell you what you need to do to have it approved. Then you can continue with rehab, get your permit, and sell your flip.
Demo the Unpermitted Construction or Sell As-Is
If you can’t easily get a permit, you’ll usually be able to either demo the construction and continue with rehab or sell the property as-is without advertising the unpermitted construction. This really depends on the project, but in my experience, demo is usually the way to go.
Basically, unpermitted rooms and additions that you can’t quickly and easily get a permit for aren’t very well done in the first place. It’s usually better to lose the bedroom and open up the floor plan or tear down the sunroom and replace it with a beautiful back patio. Either way, you’re not going to be able to sell the property as a three-bedroom house if one of the bedrooms isn’t permitted, so it’s probably better to give yourself a more open space instead.
Take a cue from what Christina and I have learned on Flip or Flop as you flip houses and always check for permits. Then, if you find you have unpermitted construction, you can figure out where to go from there.