Flipper/Rehabber · Bay Area · Member since 2019 · 12 posts · 5 votes
Hi everyone,
I saw a house recently in my area (Bay Area, California) that was 10 bed/ 7 bath with tenants in place on month-to-month leases. The owner is a contractor himself and built the house over the span of 20 years and originally was a 2/1. He's selling his assets now that he is gotten older and has this property on the market. What is everyone's take with house hacking a property with non-permitted rooms? This house is tempting because as per the rent roll the house is bringing in close to 12k a month and as per the landlord 16k prior to Covid. My dad is considering house hacking it, but obviously we are a little fearful over the lack of permitting.
Realtor · Oakland, CA and a Real Estate Investor with Multi-Family Units and a Self Storage Facility · Member since 2016 · 2k+ posts · 2k+ votes
5y
House hacking with a 10 bedroom place with 8 unpermitted rooms looks great on paper...........until a new owner takes over .....and a disgruntled tenant decides to make things difficult for the new owner.........by telling god knows who that you are running an unpermitted rental...........actually 8 of them.
It's not worth taking that chance man. As a Realtor I had someone that asked me about a scenario like this literally on Wednesday....I showed them a place that when we got there, we all noticed there were 3 additional bedrooms that were all being rented out. My client was thrilled. Too protect my client we called the listing agent (because this info was not in the confidential remarks we Realtors see). When I asked if the rooms were permitted she said, "No, but the tenants are all long term tenants that are on month to month leases so your buyer can probably do something about that after it closes."
Translation: It will be your problem after we close.
I also asked if they had written lease agreements with these "long term tenants". Same answer, "No, but they always pay on time, in cash."
Translation: It will be your problem after we close.
I then asked if the owner had receipts for these cash payments......"No, but they are great tenants."
Translation: It will be your problem after we close.
Royce, I would be very careful about that deal my man.
Rental Property Investor · San Francisco, CA · Member since 2013 · 1k+ posts · 1k+ votes
5y
I agree with Brian. In the marketplace you’ll usually see 2/1’s being illegally changed to 3/2s, which still has risk, but at least is a more common occurrence. But taking a 2/1 and adding 8 illegal bedrooms and 6 illegal baths!?! That’s seriously No Bueño!
That could lead to ALOT of trouble. It’s a serious habitability and fire hazard (google Oakland ghost ship). city could easily construe this as an illegal attempt to make a boarding home, etc. which can definitely lead to big fines, and having to dismantle everything.
Real Estate Broker · Portland, OR · Member since 2019 · 4k+ posts · 2k+ votes
5y
Biggest issue is if you EVER pull a permit that needs an inspector, they're looking for code violations all the time since they have a quota (I think I'm kidding).
Eventually, you're going to need to bring it inline with code and longer you wait, the more expensive since they're making new lines of code daily at the planning dept. They catch you, odds are they want you in compliance with ALL current code.
Might be worth getting a contractor that is disinterested to take a look and give you an idea.
Then again, you could threaten to rat out the seller for a bigger discount :)
I agree with Brian. In the marketplace you’ll usually see 2/1’s being illegally changed to 3/2s, which still has risk, but at least is a more common occurrence. But taking a 2/1 and adding 8 illegal bedrooms and 6 illegal baths!?! That’s seriously No Bueño!
That could lead to ALOT of trouble. It’s a serious habitability and fire hazard (google Oakland ghost ship). city could easily construe this as an illegal attempt to make a boarding home, etc. which can definitely lead to big fines, and having to dismantle everything.
I’d run away!
That’s an in accurate reference to such a tragic event. You should do some reading.
Rental Property Investor · San Francisco, CA · Member since 2013 · 1k+ posts · 1k+ votes
5y
@Cory Thorbeck no it’s not inaccurate, and I don’t appreciate your condescending attitude. I know all about the ghost ship. Main point is that both situations are serious fire hazards, when significant and blatant misuse of illegal sleeping areas/room are made from structures not designed for that high capacity of use.
@Cory Thorbeck no it’s not inaccurate, and I don’t appreciate your condescending attitude. I know all about the ghost ship. Main point is that both situations are serious fire hazards, when significant and blatant misuse of illegal sleeping areas/room are made from structures not designed for that high capacity of use.
You are so right ! i’m so ignorant, golly.
Your profile says it all. all about the money. But you know what— maybe you should lower your rent prices.
Over here talking about dozens of innocent lives taken like it’s no big deal and trying to call me condescending. You should pull the mirror off your bathroom wall, hop off at fruitvale station and hold it in front of you, walk around reading your profile while you reflect about how much money you make. Housing is to house people to have a decent place to sleep, not gouge prices in mass for profits that ultimately displace people into situations as you are ‘defending’ Don’t forget to stop and the local Wendy’s off international.