Dax, Other/Just Looking in San Francisco, CA

Is it worth renovating an in-law suite that was built without permits?

Asked by Dax, San Francisco, CA Wed Oct 21, 2009

Hi, we own a Marina style home in Ingleside. When we purchased the house it was listed as a 2 bedroom and 1 bath home. However, it actually has 2 full bathrooms as well as 2 other rooms that can be considered bedrooms, which were built without permits. We want these rooms permitted, up to code, and aesthetically pleasing.

A plumber quoted around $5k to update the bathrooms plumbing, which was done incorrectly. The electricity is not out of code, but is run in metal pipes on the outside of the wall. An electrician quoted me between 5k and 7k to rewire it all inside the walls so it looks nice (as well as add more lights and outlets). I will do most of the structural work myself (new drywall, flooring, etc).

My question is, then, is it worth the work? Will the value added to my home be worth the money it will take to do the work?

I'd also like a real estate agent to come by and check it out to get a professional opinion first hand.

Thank You,

Dax

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Answers

9
A real estate agent is not really going to help you. You need to first find a good architecture and attorney along with a contractor to advise what you need to do. I noticed someone suggested to have a building inspector stop by...absolutely not...once you figure out with your professionals how to handle your situation, then you have some plans drawn up and then you go to the city and pay your fees and then commence work.
If you go to the city and "turn yourself in" for illegal work, whether or not you constructed it, you will then have a limited amount of time, ie less options, and have to pay up to 10x punitive fees for the building permit.
I know what I am talking about...start as soon as possible and decide whether you have enough money to complete the work required. Otherwise, the best thing to do is to get a demolition permit tear the whole thing out...its not worth the headache.
0 votes Thank Flag Link Sun Feb 28, 2010
Dax--The averages I pulled are from the MLS, but when it comes to specifics, you have to drill down a bit. So please don't panic. However, I think you should be careful about how much money you put into the property at this point. Values have definitely dropped in Ingleside over the past few years, so simply sitting tight with what you have may be the best option. Regardless of what you do, it'll cost money.

Feel free to email me at ebermingham@pacunion.com if you'd like to chat more. Am happy to take a look at the configuration of your lower level. I think it's wise of you to solicit input, because I see a lot of unnecessary remodels that I wouldn't have advised upon being asked.
Web Reference: http://insidesfre.com
0 votes Thank Flag Link Thu Oct 22, 2009
When would you like me to come by?

Gregory Garver - Commercial Real Estate Broker
Broker License# 01716531
(415)225-9894
gregory.garver@gmail.com
http://www.gregorygarver.com
0 votes Thank Flag Link Thu Oct 22, 2009
well... if you want the house to appraise for what you have right now it has to be permitted construction, because if you don't then your house is only worth what was origionally permitted wtih
0 votes Thank Flag Link Wed Oct 21, 2009
Hi Dax,

I hope this email finds you well. I am not an attorney, but as I understand it, unwarranted spaces are extremely hard to make legal and upgrading unwarranted space is not allowed (you cannot take a permit to complete work on unwarranted space). In terms of valuation of your home, real estate agents can only assess value based on warranted areas. Upgrading unwarranted space would not add financial value to your home. Obviously people upgrade unwarranted spaces (not legally), so they can better enjoy the space, but the amount you spend on this unlawful upgrade will not be recouped in your sale price.

Please let me know if you have any questions or require additional information.

Laila Salma
Investment Sales Associate
DRE # 01722808

Salma & Company
1958 Union Street
San Francisco, CA 94123

415.931.2998 T
415.929.1530 F

http://www.salma-co.com
0 votes Thank Flag Link Wed Oct 21, 2009
Hello Eileen, thanks so much for the helpful suggestions and insites.

The numbers you give scare me. I know home values have fallen quite a bit since we purchased the home in 2006 ... but so much?

The information is actually on Trulia here: http://www.trulia.com/homes/California/San_Francisco/sold/11… As you can see, we paid $820k.

More pictures of the property are available here: http://www.ainsleetillbrook.com/231_jules.htm

Though the average in Ingleside is $581, houses like mine are a bit higher (according to Trulia), at $630k. So, we've lost about $200k! That's horrible. A house on the very next road over (technically that's Ingleside Terrace), has a list price of 1.4 million. I think our house is worth more because, though they couldn't call it a 2 bathroom home, the second bath was listed as "unwarranted" along with the 2 bonus rooms. Also, we have a nice backyard with an in-ground sprinkler system and the most grass of anyone on our street (as far as I know).

We don't want to lose so much money on our home and probably won't look to sell until the market heals itself somewhat. Would legalizing these rooms help with at least alleviating some of our loss?

I love that you mention "especially if you have a master bedroom/bath that is connected internally & doesn't require tromping through the garage to access." I was wondering if fashioning the rooms to seem like a master would be the best idea. Both the bonus rooms have closets. However, the large one (our library) does not have its own entrance. You have to walk through the smaller one (our office) to get to the larger one. To be 2 bedrooms, do both rooms need their own entrances? The bathroom is also across the hall. As far as access to the rooms from the garage, this is actually how it is currently set up. However, our idea is to transform a small coat closet in our foyer into a hall that leads to the rooms instead, as the back of the closet is actually against the wall of the downstairs hallway. Then, I'd close the hall off from the garage and add a nice flooring and ceiling, etc. I want it to feel as if it grows organically from the home.

We probably don't want to live here for too many more years. In the best world, we would like to sell within a year or so (if not sooner). So, you are saying just fixing code issues and minor aesthetics is all we should spend money on? The electrician said the electricity, although running on the outside of the walls, is legal. Should I not spend money on hiding the wires? Is it not worth it then?

I'm sorry this is so long,

Thanks for all the great help!
Dax
0 votes Thank Flag Link Wed Oct 21, 2009
Sandy, thanks for the helpful and prompt response!

I have spoken with an administrator at the city inspector's office and he made it very clear that the city isn't very supportive of current owners updating these areas. He basically told me that if an inspector comes out, I'll be cited every which way, be charged fines, and be forced to correct the areas no matter the cost. He wasn't very nice about it, and that put me off initially. It seems that the city can't help and that I'll have to start the process as if the areas don't exist at all.

Considering almost every house we viewed before we purchased ours had these illegal rooms in them, I find the city's unhelpful attitude to be very strange. Not only would I expect more help from them, I'd think the city would actually have an instructional program to encourage and help new homeowners make their homes safe and legal.

Thanks so much,

Dax
0 votes Thank Flag Link Wed Oct 21, 2009
You should have your city code inspector come and take a look to find out what work the city will require in order for the structure to be permitted. It is definitely worth it to bring your property up to code if you want to sell it later on.
0 votes Thank Flag Link Wed Oct 21, 2009
Hi--It's always a plus to "legalize" unwarranted space, particularly if you're aware that structural items such as plumbing & electrical were not done correctly. (This is, ultimately, what people fear when it comes to unwarranted space.) So for code and safety reasons, I'd recommend correcting the existing plumbing & electrical if you can afford it.

In terms of the aesthetically pleasing part of things, how much you spend should depend on your future plans for the property. If you're planning to remodel downstairs to suit your needs and you intend to live in your home for a few more years, making this sort of investment can be beneficial.

If you're planning to move within a year or so, you might want to correct the electrical & plumbing, and do some minor cosmetic work (painting, cleanup) so the next owner can customize the lower level to his/her needs. Legalizing the bedroom will presumably let you claim three bedrooms for sale the next time you sell. The average price in Ingleside of a 2BR home over the past year was $431,417---with most homes selling in the $400,000s & $500,000s; the 3BR average was $528,656). So there is a definite difference in dollar amounts. But in the end, you'd have to compare specifics between the most comparable properties and your own.

I've seen useful, very appealing "rooms down," and I've seen weird stuff. The legalized versions are usually nicer, especially if you have a master bedroom/bath that is connected internally & doesn't require tromping through the garage to access. In the end, you can't predict who'll be the next owner of your house, and whether he/she will use the downstairs for a workout room, office, guest room, etc. So again, I'd recommend doing any renovations primarily to suit your needs and your budget.
Web Reference: http://insidesfre.com
0 votes Thank Flag Link Wed Oct 21, 2009
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