To permit or not to permit

[Mark Stone]

Hey Guys! Got a question that I was hoping some more experienced investors could help me with!

Thanks in advance!

I recently bought a SFH that needs some work. It is a 4/1 but it also has a separate building in the back that is finished. My main question regards the building in the back.

This property was basically listed as a shed (permit was pulled apparently to build) when I purchased the property and was not counted towards the square footage, but runs about 450 square feet.

I would like to turn it into an efficiency rental unit, so would need to have a bathroom and kitchen added. I am wondering whether or not I should have permits pulled to do this.

If I did get permits pulled would this count the building square footage towards my property taxes?

Would I need to have the finished "shed" which already had a permit pulled inspected and approved to be up to building codes for living then?

If my zoning did not allow for multiple units on a lot (I haven't checked yet), would building out this building cause issues is I went to sell the property? (i.e. purchaser taking out a mortgage wouldn't be able to bc couldn't get home owner's insurance to rebuild in case >51% burnt down in fire)

I think I could rent the unit when finished for $400-500/month so is perhaps is it best to bite the bullet on paying permits and maybe more taxes for the increase in monthly income?

Thanks again for any input you may have!