Loan on non-permitted structure

[Account Closed]

Hello BP community, I have a question and would love some feedback from you pros. 

The quick story is this: I work as a RE agent here in CA and have a buyer who wants a 650k property that has a non-permitted home on it. He has 40% cash to put down and has the cash to buy the permits once he owns the property. 

Who would you recommend going to for the short term loan? 

I am currently working on making sure that the home will be able to get permits once the buyer takes ownership. Any advice? 

Thanks, 

[Troy Sheets]

Originally posted by @Account Closed:

Hello BP community, I have a question and would love some feedback from you pros. 

The quick story is this: I work as a RE agent here in CA and have a buyer who wants a 650k property that has a non-permitted home on it. He has 40% cash to put down and has the cash to buy the permits once he owns the property. 

Who would you recommend going to for the short term loan? 

I am currently working on making sure that the home will be able to get permits once the buyer takes ownership. Any advice? 

Thanks, 

You do realize, no matter what the local code people (permitting/zoning) say, it could be a whole other ballgame once the actual process starts and it's going through multiple people, departments, public meetings, and levels of government? This is a heck of a gamble. They could make your buyer tear it down and start over. I know this sounds alarmist but when you're dealing with the government, you never know. 

I know I didn't answer your question but I'd love to hear more about how you ensure the government will or won't do something? Can your client take the hit if it comes to demo and rebuild? Is the upside, once permitted, that great? Sorry if this sounds harsh but I'm genuinely curious what the assurances you're getting from the local authorities look like.