Un-permitted editions ?

[Ryan Johnson]

Looking at a FSBO triplex. The 3rd unit is a studio 1/1. This is a potential BRRRR play for me. I'm fairly certain the 3rd unit was not permitted as HCAD only list as a duplex. Id be rehabbing the entire property getting everything up to code. Anyone have any experience with this situation?

What risks will I have with the lack of permitted edition when I permit the rehab?

Will HCAD re-classify as a triplex?

Can they make me tear it down?

Will i run into issues on the refi if list as 1750 duplex by HCAD when its really a 2100 triplex?

Any and all advice appreciated. 

[Dave Chapa]

@Ryan Johnson

"Id be rehabbing the entire property getting everything up to code." This is where it can bite you. If the plumbing, electrical, structure, foundation,  etc.. are not up to code, then what will it cost to bring it up to code? I would have a licensed contractor look at it beforehand.

"What risks will I have with the lack of permitted edition when I permit the rehab?" You will have to bring it up to code unless it's grandfathered. However, the 3rd unit doesn't even count unless a permit was pulled for the addition. 

"Will HCAD re-classify as a triplex?" Yes, once they find out when they audit the area. 

"Can they make me tear it down?" The City of Huston can. Have a licensed contractor (with the City of Houston) look at the property. You could also call the Houston City permitting and ask general questions.  

"Will i run into issues on the refi if list as 1750 duplex by HCAD when it’s really a 2100 triplex?" I would ask your loan company. They will request a new survey and appraisal. 

In my opinion you are buying a duplex with a questionable addition. I would verify some of the hard questions before buying, especially if your numbers are dependent on the 3rd unit.