- Construction Permits Are Not Always Necessary When Rehabbing Homes. Here Are The Pros and Cons To Pulling A Construction Permit For Real Estate Investors...
Hi, this is Frank Chen with REIClub.com, the only site you need as a real estate investor. Today I’ve got a quick video on whether or not your contractors need to pull construction permits.
I’ve been rehabbing homes for awhile, and dealing with contractors, I run into the issues of permits. But what i’ve learned, is that permits are not always necessary. Some investors prefer it, but this video is to simply inform you of the pros and cons when it comes to making this decision.
Pros for Pulling Construction Permit:
- Good for investors with no construction background
- Highly experienced inspectors provide thorough repair evaluations before work is done
- Small inspection cost (few hundred) may save you thousands in repairs
- You know your investment will be brought up to code correctly
- Less liability - work is more insured
- All Additions will be reported - increasing value of your home
- Take advantage of city Rebates - Air conditioning, windows, etc...
- Time to sell - Most home buyers will want an inspection done - no problems - peace of mind
Cons for Pulling Construction Permits.
- IF you are the general contractor - Paperwork takes time - not always approved
- Tedious process - city can be very picky
- Check-ups by project - Delay project completion until city approves the work - Always have someone looking over your shoulder
- Can be costly due to additional work requested by the city
- Overall liability is yours - city code, damage to neighbors, etc...
- Working with “licensed” people can be expensive
- Once the city gets into the house, they may have you bring other stuff up to code
- All Additions will be reported - may increase property tax
Rehabbing Real Estate Investments without a Permit
- Avoid city code checklist - still needs to be to code
- Work with more flexible contractors - non-licensed or licensed
- Some contractors know how to get around permits, and still bring your house up to code
- Must be careful - city drives around looking for new construction
- Befriend your neighbors - could report you
- Don’t give reason there is construction going on
- Be Prepared for any liability issues
- Be prepared: The city can stop construction at any time, delaying weeks of progress
- Municipalities have the power to ask you to remove or condemn work not approved by the city
Note: When it comes to electrical, plumbing, or even the foundation, it will be very hard to avoid permits.