I do like the peace of mind that comes with the knowledge that the work has gone through the official permitting process, as this significantly improves the odds that is was done correctly and will not be a problem later.I am wondering if it is a good idea or a bad idea to purchase a property with significant recent unpermitted work if I can get it for enough of a discount to have all the work inspected, fixed if necessary, and perhaps retroactively permitted. 

A lender might be able to use the rental income to improve your DTI and get you approved for a higher amount, though it may only be a portion of the rental income since its been less than 2 years.

has your credit rating improved?

Value-add - first 2 months improving the paint/decking/driveway/gutters/drainage/etc.

I mentioned this to my friend that owns the company and he suggested that maybe my new tenant would be able to make improvements as he previously did construction.

A local realtor estimated that, after a few more cosmetic improvements, 2 weeks of ads, and 2 consecutive openhose weekends, we would likely gross $336,000 to $355,000.

A local realtor estimated that, after a few more cosmetic improvements, 2 weeks of ads, and 2 consecutive open house weekends, we would likely gross $336,000 to $355,000.

In my market, I would be able to put down 20% total on the PP and the budget needed for improvements.

My understanding is that I can fill out an improvement acknowledgement form and get the finished basement permitted within a year. 

Value in the land and now has some improvements like driveway and basement foundation footer.