Over the years, Christina and I have learned a lot about the ups and downs of permitting for our flips. On Flip or Flop , we’ve had more than a few nightmares with them. We bought one small house on a big piece of property because it would’ve been perfect for a stand-alone mother-in-law suite. Then we found out we wouldn’t be allowed to permit that kind of structure unless the house was our primary residence for at least a year!
On other investments, we’ve found out that bedrooms, bathrooms and other add-ons weren’t permitted. At best, we just weren’t allowed to advertise those rooms. At worst, we had to actually knock them out completely, meaning we had to spend more money to take away features because we couldn’t get permitting.
While permitting can be a huge hassle, it’s kind of a necessary evil, and sometimes you have to get a permit to move forward with a rehab you have planned. So how do you decide when to invest the time and money to get the proper building permits and when to change your plans and make the best of a bad situation?
When You Have the Time and the Budget
First of all, if you find out that you need to get a room or addition permitted before you proceed, you’ll want to figure out your timeline for the entire rehab. If you find out about your permitting problem early on and you haven’t already allocated all of your rehab budget, then you should probably go ahead and have your general contractor or project manager apply for the permit for you.
If you’re running short on time or budget, you should probably take a step back and see what else you can do with the space that doesn’t require further permitting. For example, let’s say that you have an unpermitted loft bedroom in what you thought was a three-bedroom, two-bath house. Knock out a wall, and you have a lofted office space instead of an illegal bedroom. Now you have a two-bedroom, two-bath house with a beautiful office space and a more open, modern floor plan.
Always Have an Exit Strategy
If you’ve read much about real estate investment, you’re probably pretty familiar with the idea of an exit strategy . You know that you need to have a plan for what you’ll do with a flip property if you have to go over budget or if it sits on the market going stale. Here’s a secret—you should have exit strategies for your rehab projects, too.
If you find out you need a permit for one of your rehab projects, you hope that you’ll get the permit in time and it doesn’t kill your rehab budget. The thing is, that’s the best-case scenario, and you can’t ever plan for that. You have to come up with options and exit strategies so that you can handle it if you don’t get the permit, if the permitting process takes too long, or if it costs too much to get one.
Exit strategies can look a lot like the loft office example I mentioned earlier. You can also create cool strategies like the one we came up with when we had a kitchen that was way too small and an unpermitted closed-in patio. We opened up the patio and created a kitchen garden with a great inside-outside feel that made the house feel bigger, more unique, and a lot more fun to live in. I don’t need to tell you that we sold that house really quickly, do I?
If you stay on top of them, permitting situations don’t have to turn into permitting nightmares. Just keep your eyes open for creative options and stay focused on your end goal. You may or may not get your permit, but you’ll find a good solution for your flip.
The post Building Permits: When to Get Them and When to Change Your Renovation Plans appeared first on Redfin Real-Time .