How Building Permits Can Help You
Having a permit will help you save time and money during the house flipping process. Once you have decided on the renovations you are undertaking, you need to make sure that you have the proper permits.
Permits prove that the worker is insured and professional, which can help a house flipper avoid some serious headaches.
The permit process also protects you against safety issues (electrical, structural, etc.) and it helps to make sure that the project will be completed accorded to local building code. To a homeowner, it all boils down to having it done right the first time.
What Happens if I Don’t Have a Permit?
Permits Will Help You In The Long Run
Failing to obtain the proper permits may complicate or prohibit the sale of your property.
Buyers will often ask for proof that the work on the property was under a permit for their own protection. Permits increase the likelihood that the work was done professionally and safely. Some areas and municipalities will require a permit for work previously done onto the subsequent buyer. This means that if there are issues with the property and the work was done without a permit, it’s now the current owner’s problem. It will result in extra costs, such as paying a fine or doing the work again.
Getting a permit will also protect the house flipper. Government inspectors will sometimes come to the property to inspect the work and approve the completed work. This process protects the property owner because a qualified third party has evaluated the work.
Your buyer’s lender might refuse to fund their loan if the renovations were done without property permitting and inspections. Failing to obtain a permit may slow down the sale process if a buyer requires that you retroactively permit your job. This may result in increased costs for work that may need to be redone or it could even scare buyers away completely.
How Can I Get A Permit?
Know The Municipality Rules Before Committing To A Rehab Project
Rules For Flipping Houses
You can obtain a permit from the local municipality where the property is located. Most reputable remodeling contractors will obtain the necessary permits when the project begins. They will be responsible for filling out the required paperwork and submitting plans as needed. At the time you enter into the agreement for rehabbing with a contractor, the responsibilities for obtaining and paying for the permit need to be clearly defined.
If you ask a contractor that works in multiple municipalities, they will be able to tell you how easy or difficult the process may be.
Before buying a property to flip in an area you have not worked in before, it is a good idea to call the local building department to find out the best way to get the needed permits. Costs can be significant and can change the economic structure of your project.
Permit expenses in some municipalities are related to the cost of the work being done and in others it is a flat rate. In certain places, multiple permits need to be obtained for different work areas (plumbing, electrical, septic, etc.), other times, only one permit is needed.
A bond may be required for some work and other work may require a large deposit to the municipality that will be held until the work is completed.
Costs can vary dramatically. It’s important to be careful before committing to a project and to make sure that the contractor is familiar with the process for where the property is located.
What Will Require a Permit?
Which Projects Will I Need A Permit For?
Every municipality is different, certain projects will almost definitely require a permit and others will not.
These renovations will require a permit:
- Expanding the square footage of the house
- Demolishing a loan bearing wall
- Installing new electrical wiring
- Installing a fence over a certain height, generally 6 feet
- Parking a dumpster on a public street
- Building a deck above a certain height
- Anything involving a public sewer line
The following projects might require a permit:
- Minor plumbing work, such as moving a sink
- Demolishing a non-load bearing wall
- Punching in a new window or door
- Cutting down a tree
This work will most likely not require a permit:
- Installing a new roof
- Parking a dumpster on your own property (this may be an issue with your housing association)
- Installing flooring
- Replacing a sink
- Replacing existing doors and windows
- Installing exterior siding
- Replacing countertops
- Minor electrical work, such as replacing an outlet or existing light fixture
- Building a deck below a certain height
Although certain projects may not require a permit, you will need to check it all yourself. Call your local permitting office to find out more information.
Inspections After Building
Permits Will Help Make The Inspecting Process Smoother
Inspections House Flipping
The party who issued the permit will inspect the project at certain points and when it has been completed. If the project does not pass inspection, there will be additional work and expenses required.
Call an inspector after each phase of your renovation is finished. The inspector must be able to evaluate the work that has been done or they may not sign off on the work.
For example, if you are rewiring or replumbing a property, the inspector needs to see the work that was done, so drywall should not be put on until the inspector signs off on the electrical or plumbing. If this does not happen, you might need to remove the drywall to allow for inspection. This will waste your time and your money.
It is a good idea to pay your contractor when you know that the work has been done to a satisfactory standard. Ordering an inspection during the different payment intervals will protect your from low standard work. Be sure to confirm that this payment requirement is part of your contract with your contractor.
Inspections are on a pass fail basis. If the work passes, you can advance to the next stage of the project. If it fails, it will have to be redone until it passes the inspection. Most professional contractors will guarantee that if something did not pass, they will fix it without an additional charge. If they try to charge you additionally, then you should find a new contractor.
(October 2014 Newsletter)