Oct 10
5
by Julie Broad
I’m not sure what to call the 70′s house anymore! With the new flooring down, most of the walls painted and the light fixtures replaced it’s left 1970 and entered 2010. Then again when a President’s term is over in office they still call him Mr. President so perhaps we’re ok to keep calling it the 70′s house? 
Anyway – as I mentioned in one of my recent posts - we’re in the process of turning the main floor into a legal secondary suite. When we purchased the property it was for our rent to own program, but as we got into the renovation planning we realized this property had tremendous buy and hold potential with the addition of a suite. And, with all the work we were already doing, the addition of a suite seemed very feasible.
The decision is not quite final yet because we are waiting for word on the permit we need to do the work from the City of Nanaimo (and any surprise costs that arise as a result of getting the permit), but we think that even after management costs this 70′s house should generate $400 – $500 a month of positive cashflow with a secondary suite. So if everything goes well with the permit we’re going to go ahead and turn the 70′s house into a two unit home that we hold onto.
Here’s the kicker … the catch … the spinach in our teeth though …
When we apply for the permit any work done previous to us that’s been done without a permit is likely to cause a notation on title indicating work’s been done on the home without a permit.
Yep – it’s a bit like taking a beating for a crime someone else committed. We’re trying to do everything above board and the way the City wants it done and we will end up with some issues to deal with down the road because of something someone else did in the past.
And on the surface you may think it’s not a big deal that there is a notation on title saying this but the notation only says that: work’s been done without a permit. It doesn’t say WHAT work was done without a permit.
While not a deal breaker it is a kick in the pants because the only way to avoid such a notation is to take the home back to it’s last permitted state. In the case of our property that means right back down to an unfinished basement without the car port storage room added on.
Um … no thanks … that would make the renovation cost prohibitive.
Instead I’m just adding a new “to-do” item to my checklist when I buy a property to now wander my way down to City Hall (or send our new office admin person to the City) to pull up the details on the last permit and last set of plans on record for the property – especially if I foresee myself needing a permit to do work on the home in the future.
What Do You Need a Permit For?
Every city has different rules but in general you will need a permit for anything involving:
- Electrical
- Plumbing
- Structural changes (moving or removing a wall for example)
- Footprint changes or additions (adding a deck for example).
In general you do not need a permit if you are just repairing or replacing stuff that is already there.
So if you have plans to add a big deck, add a new structure to the property or change up the electrical in anyway then you probably want to figure out what’s been done on the property BEFORE you buy it. Otherwise you might be faced with poor choice between a notation on title or taking the work back to it’s original condition like we were. In our case, we simply chose the less expensive of two options for today and hope it’s not a big problem for us in the future.
But – hope is not a strategy we like to use very often – which is why we’re sharing this lesson with you.
And while I am at it – here’s 5 other boring but important things you should know before you buy a rental property from our series of 31 Real Estate Investing Video Tips (all 3 minutes or less and totally free!):
