Unfinished Basement Question

[Ryan Horne]

My partner, @Michael Davis, and I went and walked a house today with a contractor. This will be our first house we are looking to flip. This house is listed on the tax records as a 3/2 with 1275 square feet with a 1275 sq feet "unfinished basement". Apparently the previous owner finished out the basement but according to the contractor we walked with, this was an un-permitted renovation. Being our first flip he suggested to us that we do not go through the county and pull permits to renovate and add this unfinished basement to the tax records so we could list this house as a 4/3 as it has an extra bedroom and bath as well as extra living space downstairs. He said this would open up a can of worms with county inspectors and could end up being an extensive cost to get it up to code.

The numbers look like they will work for a flip as just a 3/2 and us just doing cosmetic rehab to the basement to make it look acceptable and make sure it is safe. But are we missing out on potentially a ton of value by not going through the county and getting this basement added to the square footage? Another wrinkle in this is there are no recent comps in the area for a 4/3 with that much sq footage so we are unsure what value it would even bring to us. This being our first property, I tend to agree with the contractor that opening up a can of worms like that basement may be too much for us to handle on our first project. What say you BP?