Investment property with alterations (add room and bath) but no permit in Florida-

[Andrea Chacon]

Hi everyone, we have a property under contract but we just got informed that there are alterations done to the house without appropriate permits. How hard will it be to bet appropriate permits for the alterations (2 rooms and bathroom).  We are looking into purchasing cash and do some light updating but the county records shows as a 2/1 but the house is actually a 4/2. Will we be able to refinance this property without the permits? Or will the appraisal just not consider that additional bathroom and bedrooms and based his appraisal with the tax records. 

We do want to get the appropriate permit but I am thinking that will take a lot more time and additional expenses to have it all in order and we need to be able to refinance it since we are purchasing cash (we are having a hard time with a lender which we initially wanted to do a rental 30 year loan, but not sure if there will denied due to this non permitted alterations to the house). 

Our offer was already accepted and we are within the due diligence days, but we just got informed after the offer was accepted that the additions don't have the permits and the current owners say that they purchased the house like that with an FHA loan? (not sure how they were able to get that loan and refinancing without permits?

I am trying to be positive and also thinking "worse case scenario" most importantly we would like to refinance it as soon as possible.  The goal in the future is to get the permit and add the value for a future refinance.

I have called the county and building department and they said that I will need blueprints of the alterations and submit them for approval and get all the inspections in place (I know this will be a headache and can be very costly). The house is also very old and there is no records of original blueprints, so how will we know which are the rooms that were added? also if the rooms don't have closets maybe it can pass as a Studio, dinning room, ? I am not sure if florida law requires a closet for a room to be considered a bedroom. If that is the case I could get a permit for the bathroom only and not the rooms, which might be faster. Also there is no way to know where the original bedrooms were or the layout of the property since there  is no records? not sure if that is a good thing or bad since we will still need to get some new blueprints for the alterations anyways.

Sorry I am just trying to brainstorm and make a decision based on all the possibilities. This will be a long term rental that we plan to keep for many years. 

Thank you again for any input and help!

[Melvin List]

@Andrea Chacon this could be a huge problem down the road when you try and refinance.