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The Permits You Need If You're Doing a Fix and Flip

Posted by Walnut Street Finance Team on Mar 29, 2018

When you’re doing a fix and flip, permits may not be the most exciting part of the job - but they might be the most important.

Permits you need for a fix and flip

Securing the right permits can be one of the easiest ways to set yourself up for success and save yourself a major headache down the road. Depending on the nature and extent of your fix and flip, some permits are optional, while others are required. 

Here’s everything you need to know about permits.

There is a lot more to fix and flipping houses other than just going in, making  the purchase and walking away with a profit. Download our free eBook to learn  the ins and outs of property acquisition & construction so you can get the  profit you want. 

Why would you want a permit?

Getting the right permits can be a major determining factor as to whether or not your fix and flip will be successful. While they may seem time-consuming at the moment, permits ensure that any work done on the house was done by insured professionals, keeps your house up to code, and releases you from some risk should anything go wrong in the future.

Put another way, buying a house where non-permitted work has been done can be a nightmare, as the new owner of the house usually assumes all responsibility for past work. In other words, if you purchase a house where a previous owner failed to get proper permitting for work, it is now your problem. This means you pay for additional work, along with any fees or fines that may be associated with the violation. These costs could be major - which is why many lenders make loans contingent upon inspection and proper permitting for past work.

When will a permit be required?

Whether it’s a renovation or a total rebuild, there are certain jobs where you’ll almost definitely need a permit. You will almost definitely need a permit if you’re adding square footage to your property, whether expanding your floor plan or adding an additional structure like a deck. Dangerous tasks also often require permits - this includes demolishing load-bearing walls, installing electrical wiring or systems, or doing any work involving a public sewage line usually. Usually, purely cosmetic work like painting, replacing floors, and fixtures or patching holes will not require a permit (although you should always double-check your local laws and ordinances).

Here’s the thing - even if a job doesn’t necessarily require getting a permit, getting one will show prospective buyers that a third party has inspected and approved your work, which their lender may require anyway. The more significant the job, the more likely this is to be the case. In the end, getting a permit can not only release you from liability to a certain extent, but it can also make your house much easier to sell.

How can you get the right permits? 

One of the easiest ways to figure out which permits you need for your next fix and flip is to work with a trusted contractor. More often than not, contractors know when permits are required for certain work, and when they won’t be necessary. 

If you’re looking at a new neighborhood or it’s your first fix and flip, you can also simply reach out to your local building department and describe the nature and scope of work you’re planning for your property. They’ll let you know what is required, along with the associated costs of those permits.

However you do it, it’s smart to look into permits ahead of time, as getting a building up to code can be costly. The last thing you want is to buy a property only to find that the cost of doing the job right will outweigh the estimated increase in property value from your renovations.

The bottom line

Permits can make or break your profit. Even if they seem tedious and expensive in the short term, they can save you remarkable cost and hassle in the future.

If you’d like to learn about some of the other potential costs and benefits, check out our free ebook.

Essential Math For the Fix and Flipper

Walnut Street Finance Team

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