Looking into a property w/an unpermitted ADU

[Jonathan Rabot]

Hello, 

First time home buyer looking into using the house hack strategy. 

Came across a property with an already built ADU but it is unpermitted. Wanted to find out thoughts of pros/cons of purchasing? and any insight to barriers if bought on getting it permitted or just rent it out as the previous owners are doing?

Appreciate the help!!

[Jeff Copeland]

As usual, the answer is "it depends". 

My first question would be Do the zoning, setbacks, and density requirements for the parcel permit you to build an ADU? If the ADU wasn't already there and you asked the City to permit it, would they say yes or no?

If the answer is no, then your likelihood of getting the illegal one permitted after the fact is very low. And making the City aware of it by asking them to permit it could just result in a code violation, hearings, fines, and headaches, with a worst case outcome of you having to demolish it. 

If the answer is yes, then the next question is Was it built up to code, or are you going to have to tear it down and start over anyway to get it permitted and approved? Garage conversions and other unpermitted DIY projects are often not done correctly and safely, so again the worst case outcome is having to tear it down and start over. 

If it was built up to code and it conforms to zoning, setbacks, density, and other requirements, then obviously getting it permitted could result in a huge value-add for you. Baked into this statement is the fact that you need to be buying it at a discount in exchange for taking on this risk. 

Finally, my last questions would be How likely are you to get caught if you just keep renting it, and does the property make sense even without the ADU? 

Obviously, many people get away with renting unpermitted ADUs and additions for years, or even decades. But if there is ever a code violation on the property (often the result of a neighbor or an angry tenant complaining to the City), or you need to pull a permit for something else, which results in the City poking around out back, the gig is up and you need a Plan B.