Permitting for adding more rooms without changing sq ft

[Jaskanwal Preet Singh Chhabra]

Hello, I am an investor in Austin, Tx. I am looking at a 4 bed 2.5 bath property in Pfugerville, TX that I am planning to rent out as a co-living space (rent by the room on Padsplit). I will be converting it into a 8 bed 3 bath property. However, in adding the bedrooms, no new sq.ft will be added. I will split a giant master room into two smaller rooms and will convert the living room to get the additional three rooms. I understand I will need to pull a permit to add shower area in the third bathroom but would a permit be required for the three additional rooms, especially given I will not be adding any new sq ft to the property? I am thinking more from the insurance and future liability stand point. If so, what will be the typical time and cost to pull the permit for such a project. Thank you!

[Jaskanwal Preet Singh Chhabra]

Made another post covering the question here and few other items: https://www.biggerpockets.com/forums/12/topics/1220253-permi...

[Zachary Deal]

One thing to keep in mind if you are doing this is that you are likely to create "functional obsolescence" which could mean you are not able to get a new loan against your property and it can be difficult to resell as well. Basically if there is no "living room" and there are no comparable properties with similar square footage and bed/bath count in your area the property becomes difficult to comp or sell and lenders will not be able to use it as collateral for a loan

[Caleb Brown]

In my area if you are putting up interior walls permit is not required. If it was load bearing and you were removing a load bearing wall or adding that is different. As Zachary said once you edit the space you will need to put it back if you are to sell or refi. 

[Sylvia Santelli]

Hi---

Great to hear you are connected with padsplit as they seem to be the experts in this space. 

I am a investor and co-host in Dallas but focus on renting out whole units. Good luck!

[Bill B.]

Check local regulations on maximum number of unrelated people living under 0ne roof. 

[Bruce Lynn]

I expect you will need a permit and not be issued one.  Most cities do not allow "boarding houses" and/or have a "no brothel" law.  So if you do this, it will likely be outside of the law.  Your insurance may also not cover you or your tenants.  People probably do this all the time, but skirting the law and subject to red tag if the city finds out.  Probably depends on the location and part of town if neighbors care or notice.  However if you buy in a neighborhood where people do care or all  your tenants have cars, you may get shut down quickly.  City  can make you get rid of all tenants and leave it vacant until you put it back as permitted and get a new CO.  One city near me is checking all garage enclosures, giving nice notice to get them permitted, which they may or may not grant, and if you don't get it properly permitted by December 31, says they will start fining people.  It's an area where they generally have not allowed garage enclosures and LOTS of people have done it anyway.

There are all kinds of ways the cities find out about houses like this.  Water bill triples so they want to check for leaks, too many cars parked in the street.  Many cities now considering allowing ADUs have off street parking requirements for example.  Police drive by occasionally and see 3-4 people standing outside smoking.  Random things like this.

I can only imagine if they did allow you to add all the bedrooms, they would make you also add fire sprinkler system and a commercial fire alarm system like residential assisted living.  That adds a lot of expense if you can even do it.

All this I guess depends on how much risk you want to take or not take or can afford to take.

[Miguel Del Mazo]

I agree there is some risk with the PadSplit model. Zoning, insurance and the Fire Marshall are areas of MTR where it is much better to ask permission than forgiveness.

With that said, PadSplit should have someone who can guide you in what is allowed in the area if they serve it. Don't take their unofficial advice as gospel, so do appropriate due diligence prior to making changes to the property.

[Bonnie Low]

Quote from @Zachary Deal:

One thing to keep in mind if you are doing this is that you are likely to create "functional obsolescence" which could mean you are not able to get a new loan against your property and it can be difficult to resell as well. Basically if there is no "living room" and there are no comparable properties with similar square footage and bed/bath count in your area the property becomes difficult to comp or sell and lenders will not be able to use it as collateral for a loan

 Excellent point. If it's a simple living room to bedroom conversion, it likely won't be that difficult to return to "normal" if that's ever needed but definitely a great thing to keep in mind.

[Bonnie Low]

Quote from @Jaskanwal Preet Singh Chhabra:

Hello, I am an investor in Austin, Tx. I am looking at a 4 bed 2.5 bath property in Pfugerville, TX that I am planning to rent out as a co-living space (rent by the room on Padsplit). I will be converting it into a 8 bed 3 bath property. However, in adding the bedrooms, no new sq.ft will be added. I will split a giant master room into two smaller rooms and will convert the living room to get the additional three rooms. I understand I will need to pull a permit to add shower area in the third bathroom but would a permit be required for the three additional rooms, especially given I will not be adding any new sq ft to the property? I am thinking more from the insurance and future liability stand point. If so, what will be the typical time and cost to pull the permit for such a project. Thank you!

 A couple of things to keep in mind: you mentioned PadSplit. If you meant the company specifically and not just the concept of pad splitting, be sure they are available in your area. They actually have pretty limited reach as of now and focus primarily on major metro areas. Second, I'm a rule follower when it comes to permits. It's never worth it to cut corners on permitting because it will cost you far more in the long run. You need to make sure that your property is easily financeable if you decide to sell it in the future and any future buyer can call out non-permitted items and actually report you to the building department or, at a minimum, ask for seller concessions. If you're pulling a permit already for plumbing changes, just get the permit for the room conversions at the same time. They're not going to add much cost to the permit and you want to make sure everything you do is up to code. Just my opinion.

[Bruce Woodruff]

Yes you will need a permit. 1) you will need to add outlets on each wall as per code...and of course switches for any lights or fans. That will require a rough and final inspection. 2) When installing drywall you will need a nail/screw pattern inspection. 3) You will need to provide 'conditioned air' to these rooms..how are you going to do this and that will require inspection.

Will you have to increase the size of the electrical panel? MAybe not, but what about the HVAC? You're increasing the need for hot and cold air dramatically and it's doubtful the existing system will be adequate.

But, in answer to your original question - yes you will need a permit. Go to the city tell them what you're doing....they will tell you edactly what they will want. Don't try and slip anything by because they will catch it when inspecting the other stuff....

[Mary Jo Carruthers]

Yes, you will need a permit. Its likely that you won't get it though. Go to the permit department and ask before you start putting money into it. The permit department folks are generally very helpful. I have seen houses where folks did it anyways without the permit but that is really value destroying as it will make it very unlikely to sell for top dollar with that layout. 

[Wale Lawal]

@Jaskanwal Preet Singh Chhabra

If I were converting a property in Texas into a co-living space, I’d focus on understanding permit requirements, insurance and liability implications, and project costs. Permits may be needed for bedroom or bathroom modifications, especially if plumbing, electrical, or structural changes are involved. Since non-permitted work could impact insurance or liability, I’d consult local authorities, hire professionals, and confirm zoning compliance to ensure a smooth process.

Good luck!

[Bruce Woodruff]

Quote from @Mary Jo Carruthers:

I have seen houses where folks did it anyways without the permit but that is really value destroying as it will make it very unlikely to sell for top dollar with that layout. 

Yep - I used to hear buyers offer 50% less for any non-permitted living space areas.