Experience turning unwarranted/unpermitted unit into a legal one?

[Katrina Razavi]

Hi BP Friends! I'm considering a SFR purchase in the city. The downstairs "unit" (where the seller currently lives and will leave after sale) is unwarranted and unpermitted. There's a kitchen, bathroom 2 rooms and living area down there (part of which is the garage). The upstairs (3BR) is being rented out. My ideal scenario is to find a way to "house hack" where I can live in the upstairs and convert the downstairs into a legal and up-to-code second unit with a usable garage. But is this realistic or am I asking for a TON of added legal costs and headaches? I don't mind spending a few grand to bring it up to code, but not sure how difficult this process is.

A few notes:

• Zoning: R2
• Rents: Close to market rate so I don't even mind living in the downstairs (unpermitted) area and continuing renting it to the folks upstairs temporarily.  
• I'm not at all considering putting tenants in the unwarranted downstairs. The only person that would live there while unwarranted, would be myself.

Would love any advice or feedback from the community. Thanks!