Remodel With Permits Or Without Permits? A Cost Benefit Analysis

Should you remodel with permits or without permits? This is a dilemma thousands of homeowners face in order to save time and money.

As a multi-property owner who has done a dozen home remodels myself, my recommendation is to always do the big jobs with permits. In the long run, remodeling with a permit tends to products better and safer work. Further, remodeling with a permit helps with your home's resale value.

One of the benefits of property ownership is that you can remodel based on your tastes. Further, you can increase the value of your property by expanding its livable space. When the time comes to remodel, you will face a dilemma of whether to remodel with permits or without permits.

In this post, we'll go over:

  • My history remodeling with permits
  • How long it takes to get a permit
  • Additional costs of remodeling due to permits
  • The different types of permits
  • Trying to pass final inspection
  • Why you should remodel with permits
  • Why you may want to skip remodeling with permits
  • How remodeling with or without permits might affect the value of your home

My Remodeling History With Permits And Without Permits

Since 2005, I've remodeled six bathrooms and two kitchens. Further, I've replaced dozens of windows, re-wired an entire house, built a retaining wall, and replaced one roof with permits. I've also built one deck and created one large master bathroom by reclaiming garage space with permits.

Since 2005, I've also expanded one deck and replaced one roof with permits. The deck was rotting, so we replaced the boards. When I replaced the roof, I didn't even realize I needed a permit until I sold the property. The lack of a roof permit was part of my disclosure package.

Every single time I remodel with permits, I get frustrated by how agonizingly slow the permit approval process is. However, once each project receives final approval from the Department Of Building Inspection (DBI), I feel a huge sigh of relief.

Remodeling with a permit is a royal pain in the ass. It is why many homeowners choose not to get a permit. Not only does a homeowner avoid the critical eyes of multiple inspectors, but homeowners also don't have to pay increased property taxes on the remodeling project as well.

Let me share a typical timeline for how long it might take to get a permit. Just know that getting the permit is one step. Getting final approval for your project is the ultimate goal.

How Long Does It Take To Get A Permit

Depending on where you live and what type of project, getting a permit could take anywhere from one week to two years. To be clear, this is just to get the permit, not the time it takes to finish your remodel. Remodeling a home often costs more and takes much longer than expected.

The wealthier you are, the more valuable your time. Therefore, it is natural for wealthier homebuyers to want to buy an already remodeled home with permits rather than buy a fixer. In my younger years, I was much more enthusiastic about putting in sweat equity.

In addition to time, the decision to remodel with permits or without can be influenced by several other factors. For example, who you hire to do the work, the type of project, and how nosy your neighbors are. Believe it or not, some of your neighbors will secretly report you for not having a permit. The results could be fines or a total shutdown of your project.

If you're simply too lazy to go to the permit office or are highly impatient, just be aware there could be consequences. We'll get into the pros and cons of permits down below.

Now let's cover the different types of permits available.

Over The Counter Remodeling Permit

The over the counter permit is the easiest and quickest type of permit to get.

After purchasing a fixer in 2019, I decided to remodel the house in two stages. The first stage was remodeling the three bathrooms and kitchen. Given we were not changing the floor plan or expanding the envelope of the house, we were able to get an over the counter permit in two weeks.

Even though it was relatively easy to get an over the counter permit, I still needed to negotiate the project with my contractor and pay him to draw up floor plans for submission. The Building Department needs to see floor plans to understand your remodeling job.

I actually got an OTC permit to build my deck. I was surprised because in the past, such a permit would require a neighborhood notification for three months. Only if someone didn't complain, would the permit be approved.

Regular Remodeling Permit

Some municipalities will provide OTC permits for jobs that might require a regular permit in other cities. It all depends on how strict your city is.

If I was to expand the footprint of my house by building into my backyard, I couldn't get an OTC permit. I would need to get a regular permit, which would likely take between 6 – 24 months.

After spending the first month coming up with the design, you then have to submit the drawings to the planning department. The planning department might take three months or longer to get back to you, depending on its backlog.

Example Of Permit Record

Permit approval process
[Example shows almost 3 months to get a permit[
San Francisco deck permit

During the pandemic, the backlog became enormous in San Francisco because contractors could no longer go into the Department Of Building Inspection in person. Further, the online permit submission system didn't work properly.

Once the Department Of Building Inspection approves your permit in cities like San Francisco, you need to then send out a notification to your neighbors about your plan (if you are expanding the footprint). Your neighbors then have three months to review it and raise objections at a hearing. Only if no neighbors object will the planning department give the go ahead to start construction.

As you can imagine, this is where getting your permit approval process can run into many roadblocks. If you build too high, too big, too long, or too ugly, your neighbors may object. If there is no precedence for your remodel, your neighbors may object. Neighbors don't want their views blocked. They also tend to want houses in their neighborhood to be of a similar scale.

The grander your home remodel, the longer it will likely take to get a permit approved. In wealthier neighborhoods, you see permit fights all the time.

Related: How to Write an Engineering RFP (Request For Proposal)

The Long Process To Pass Final Inspection With A Permit

Getting a permit is only half of the battle. Once you get the permit, you must still pass various stages of inspection with three inspectors: building, plumbing, and electrical.

You may first need to get a demolition permit and have an inspector approve you've demolished everything properly. The Rough stage is post demolition when your builder frames out the house. For example, the plumber goes in and installs all the pipes within the walls. Then, the electrician drills through all the beams and wires the house.

You can't cover up the walls before passing the Rough stage. If one of the three inspectors does not pass your project, you cannot move to the next stage. Further, each inspector must be scheduled separately and sign off at each stage. The building inspector is usually last.

Building Inspector Scheduling Is A Bottleneck

What can be very frustrating is that it can sometimes take one or two weeks to schedule an inspector. If one inspector finds something not up to his satisfaction, you've got to redo the error, wait another 1-2 weeks, and have him come back.

If your contractor and sub-contractors are excellent, passing the various stages of inspection will be easier. But undoubtedly, something will go wrong. Further, building codes are always changing, usually due to better safety requirements. If you have an inspector arrive in a particularly bad mood, your project might get delayed for months.

What's crazy is that sometimes, you may have two different building inspectors or electrical inspectors wanting two different things! We had this happen once. As a result, my contractor had to call their boss and make a case as to why their requests were conflicting, unfair, and costly to redo.

Building Permit Costs

Just like how there is an endless number of things you can remodel, there's an equally endless number of permits the city requires you to pull before you can begin remodeling.

Here are the average building permit costs in America in 2021 according to HomeAdvisor. Building permit costs vary by city. Building permit costs are often usually a percentage of the remodel cost. Then there are random fees as well. Therefore, check with yours for a more accurate estimate.

Average national building permit costs

Talk about tons of building permit costs! A good licensed contractor will be able to navigate all the required permits. He may include the permit costs in the cost of the remodeling contract or send you the permit bill separately.

The Building Inspector Is On The Homeowner's Side

Given you are paying to have your remodeling project inspected, the building inspector is supposed to be on the homeowner's side. The building inspector makes sure all the electrical, plumbing, and building work is done to code. The last thing you want is faulty wiring that results in your house burning down.

Therefore, no matter how painful the inspection process is, the key is reminding yourself the building inspector is there for your own good. In fact, the more times an inspector has to come over to your house and evaluate the work, the more you're getting out of your permit fee!

If you execute the work yourself, it’s even more important to have someone experienced inspect the details. A good inspector will provide guidance on how to get things done right and pass his inspection. A bad inspector will just report what is wrong with minimal guidance. Then, you're left guessing how to best do the work.

Unfortunately, however, there are also some instances when a building inspector or contractor can hold your project hostage due to corruption. My contractor has told me stories where a building inspector won't pass a stage of inspection until they receive some type of favor or money.

Remodel With Permits Or Without Permits

Now that I've provided you with just a taste of how difficult it can be to remodel with permits, let's go through whether it's best to remodel with permits or without permits.

Why You Should Remodel With A Permit

1) Safety and protection

Without a permit you won't have three inspectors at two or three stages looking for faults. No matter how good your contractor is, there will always be something they will miss. The inspectors are trained to know the latest building codes for maximum safety.

The more inhabitants you have in your house, the more you want to remodel with a permit. I've seen too many tragedies happen due to something wrong with the building.

2) Liability protection

If something goes wrong with your house after remodeling with a permit, you may be able to sue the Department of Building Inspection for not doing its job properly.

For example, there is a luxury high-rise in San Francisco called Millennium Towers that is sinking into the sand. The homeowners sued the Department Of Building Inspection for approving the project without instructing the construction company to anchor the building deeper into bedrock. There's supposedly a $100 million resolution to fix the building.

3) More peace of mind

If you remodel without a permit, you're taking a bigger leap of faith that your contractor knows what he is doing. When it comes to business, there is sometimes a tendency to take shortcuts to maximize profits. With three building inspectors inspecting your property, you can literally sleep easier knowing you have licensed professionals protecting you every step of the way.

4) Higher resale value

You might save money upfront remodeling without a permit. However, remodeling with a permit increases the value of a home on the back end if you ever decide to sell. In San Francisco, we have what's called a 3R report (Report of Residential Building Record). The 3R report is the report card of your home. It shows all permits pulled and passed in its entire history.

If you plan to sell your home in the future, you will have to disclose your home report card. To experienced buyers and home remodelers, showing approved remodeling permits is very valuable. The more home remodeling torture a buyer has had to go through, the more the potential home buyer will value a home that has been remodeled with permits.

In fact, after a two-year remodel with permits, I'm sure the value of remodeled homes will go way up. Fewer people want to deal with remodeling fixers anymore.

5) Less stress about getting outed and fined

If your workers are particularly loud or rude one day, your neighbors might just look up your house on the building inspection's website to see if you have a permit. If you don't, your neighbors can easily submit a complaint.

In the unfortunate situation where an inspector catches you remodeling without a permit, you might receive a fine sometimes equal to 10X the cost of the permit. Further, you might be forced to redo the work given all the steps involved in getting permitted work done.

The only way an inspector can catch you after a complaint is if he sees unpermitted work. Therefore, if you are doing remodeling work outside the envelope of your house (deck, driveway, expansion), you should probably get a permit. An inspector has no right to enter your home to inspect your work without permission.

Why You May Not Want To Remodel With A Permit

1) Corrupt and inefficient city

If your city has a history of corruption and waste, you may not want to remodel with a permit. There are situations where an inspector will “shakedown” homeowners by only passing an inspection if money or a favor is given. It may be rare, but it does happen.

In San Francisco, we've got a $12 billion annual city budget. Therefore, there have been instances of corruption in the building department ever since I've been here. Our mayor, London Breed, even used to date the former San Francisco Public Works Director, Mohammed Nuru, who received bribes from a recycling business owner.

Greasing politicians to win contracts, charge higher-than-normal recology rates, and receive permits is just the way things have always been done in big cities with big budgets. It's very hard for some politicians and city officials to not be tempted by money and power.

For example, in December 2022, former San Francisco Senior Inspector Bernard Curran pleaded guilty to two counts of accepting gratuity payments as rewards for approving building permits. In 2017, Curran accepted $260,000 from the developer in order to pay off an existing residential mortgage in which he repaid $230,000, according to prosecutors.

The department’s former director, Tom Hui, resigned in 2020 after he was accused by the City Attorney’s Office of misconduct, including that he gave preferential treatment and access to a permit expediter.

2) Cost of permit and higher property taxes

The cost of a permit is one thing. The ongoing higher property taxes will likely be more costly. Whenever you apply for a permit, you must submit an estimated cost of the remodel. The cost of the remodel, if reasonable, will be inputted into the Assessor's Office. From there, your property taxes will increase based on the higher assessed value.

For example, let's say the remodel costs $100,000. If your city charges a 1.5% property tax rate, you will have to pay an additional $1,500 a year in property taxes for as long as you own the home. If you plan to remodel and sell your home shortly after, this cost isn't as big of a deal. However, if you plan to live in your house for decades, this extra cost of a permit really adds up.

3) You disagree with the need for a permit

The more you remodel, the more experienced you will get. You might find that the need to get a permit for some remodeling jobs is unnecessary. For example, you may not want to go through the entire permit approval and inspection process to change one old window.

When I pulled a permit to replace my roof one time, the inspector didn't even go up to the roof to inspect it. Instead, he pulled up to my house, looked up and signed the paper. When I replaced the back windows of my house, the inspector stepped one foot in the door, looked at the windows from 25 feet away, signed the permit paper and drove off. I definitely didn't get my money's worth in these two cases.

4) You or someone you trust can do the job with confidence

Let's say you've worked as a licensed electrician for the past 25 years. As a result, you know how to safely rewire a room from knob & tube wiring to ROMEX wiring. You may not want to get a permit for the job.

5) Getting new construction approved with a permit takes too long

Take a look at this chart below highlighting the length of time it takes to get a new build permit in San Francisco. Due to corruption, bureaucracy, and inefficiency, it now takes over 600 days to get a building permit for new housing. While you wait, the cost of materials and labor will likely go up.

How long it takes to get a permit in San Francisco - Making remodeled homes more valuable

Example Of How Remodeling With A Permit Affects Selling Price

In a hot real estate market, potential buyers might not find unpermitted work a big deal. In a potential buyer's mind, they might think doing unpermitted remodeling work is better than doing no improvements at all.

Below is a two-bedroom, two-bathroom, 1,550 square foot home that went for $780,000 over asking in March 2021. The final sales price is also about $460,000 over Redfin's poor estimate, which savvy investors are now taking advantage of.

Upon first glance, paying $1,403/sqft for this home is at least 35% higher than comps would support. However, if you take a look at the listing's floor plan, it looks like there may be some unpermitted space that makes the home larger than its official 1,550 sqft. I'm familiar with the layout of such homes and it is highly unlikely both floors are only 1,550 sqft.

The upstairs is likely around 1,200 sqft and the downstairs is around 900 sqft for a total of 2,100 sqft. Therefore, the final price of $2,175,000 now seems more reasonable at a little over $1,000/sqft.

How Much More Valuable Would The Home Be With Permits?

How much more would the home have sold for if all the work downstairs had been done with permits? Perhaps $2,300,000 – $2,500,000. Almost always, I believe the value gained from remodeling with permits far outweighs the cost savings of remodeling without permits.

During a bear market in real estate, major unpermitted work might make a home a non-starter. In other words, some buyers might completely balk at buying a home with a major remodel without permits. Why bother when there are plenty of homes with permitted work to choose from?

Therefore, before you begin your home remodel, you should do a scenario analysis.

You Should Probably Get A Permit To Remodel

Whenever you do a gut remodel, you should probably get a permit. A gut remodel involves demolition, rewiring, new plumbing, and new structure. This is your chance to update your home's guts to the safest and latest material and requirements. Big jobs put more capital at risk. Therefore, getting a permit is more important for protecting your investment.

If you have the majority of your net worth in your primary residence, you should probably get a permit. You've already got too much concentration risk as it is. On the other hand, if you're doing a remodel on a rental property that's worth 5% of your net worth, you may not care as much.

Although the entire permitting and remodeling process is generally very unpleasant, once you've finished remodeling with a permit, you will feel great that you did. The feeling is sort of like studying very hard for a test and passing with an “A,” versus copying your friend's work.

You Might Always Wonder What If… If You Don't Remodel With A Permit

If you don't remodel with a permit, you might always wonder whether your contractor did the job up to code. There have been several instances where an inspector did not pass a stage because my contractor didn't do something small, but important.

One example was the contractor forgetting to put a rubber membrane under my shower pan and shower bench. Another example was when my tennis buddy installed a mechanical valve when replacing a leaky pipe. He should have soldered the pipes together. Another example was not having an electrical junction box to break the circuits in case of a surge.

When To Remodel Without A Permit

For small jobs that aren't a safety hazard, remodeling without a permit is probably OK. For example, if the window was improperly installed, you might experience a draft that can be plugged. Although an improperly installed window might fall out, potentially causing serious damage to the person leaning on it! The problem is, small jobs are often accompanied by minimal inspection by the inspector.

Overall, I think for 80%+ of the jobs, you should remodel with a permit. Not only is the peace of mind worth a lot, but so is the improved resale value of the home.

You might also wonder how much more you could have made selling your home with permits. After all, as a real estate investor, you're always trying to achieve the maximum return possible.

Now that I'm a father, I will likely never buy a home that has been remodeled without permits. Once you see how much goes into remodeling, you will be less inclined to risk it. People take way too many shortcuts which could cause damage or pose safety hazards down the road.

As I look into the future, I see the value of remodeled homes with permits increasing at a faster rate than homes that need work. The pandemic has made getting a permit and finishing a remodel more difficult. Therefore, there will be incrementally more demand to buy homes that have been properly permitted.

Invest In Real Estate Passively Instead

Now that I'm gone through so many home remodels, I actually never want to go through another remodel with or without a permit again. My city of San Francisco makes remodeling too tough. My time is far too precious now with two little ones.

Instead of remodeling for profits, I want to invest in real estate passively through public REITs and private real estate funds like the ones offered by Fundrise.

Fundrise is the leading real estate crowdfunding platform to help you diversify and earn income 100% passively. During times of volatility, Fundrise tends to outperform stocks based on historical results. For the average investor, I think it's best to invest in a diversified portfolio of real estate holdings.

For those of you who are accredited investors, take a look at CrowdStreet. CrowdStreet focuses on individual real estate opportunities in 18-hour cities where valuations are lower and cap rates are higher. Due to the spreading out of America, growth rates tend to be higher in 18-hour cities as well.

Both platforms are free to sign up and explore. I've personally invested $810,000 in real estate crowdfunding to diversify and earn income passively. Private real estate has been one of the most stress-free and best investments I've made since becoming a dad in 2017.

Why Home Remodeling Always Costs More And Takes Longer Than Expected

Home Remodeling Guidelines To Get Maximum Returns

Improve Your Home's Value By Creating Sanctuaries

Readers, what is your opinion on remodeling with a permit or without a permit? Have you had a terrible experience with an inspector before? What kind of remodeling jobs have you done without a permit. How much do you think remodeling with a permit affects the resale value of a home?

About The Author

36 thoughts on “Remodel With Permits Or Without Permits? A Cost Benefit Analysis”

  1. I’m an Interior Designer and specialize in residential remodels in the San Francisco Bay Area. Most of my projects are in San Francisco and I have pulled a number of OTC (over-the-counter) permits with my drawings for my clients. In fact, I got another one coming up in a couple of week. Sometimes the OTC documents also include drawings and calculations from my structural engineer I work with. Going to the DBI is never fun and it can be a bit a stressful and painlful process. When submitting drawings for permitting, we are always at the mercy of the plan checkers who can essentially go tumbs up or down at their own discrection, at least in SF. You can also get into discussions about code interpretations but in the end, you have no leverage compared to the plan checker. And never ever get into a heated discussion with a plan checker in particular as a professional since you will be back in there for other projects in the future.

    I always tell my clients, the homewoners, we should get a permit in particular if they don’t know anything about the building trades. And always when there is electrical work to be done as that is a life safetly issue. Some contractors, and oftentimes unlicensed ones, will try to talk the homeowner into skipping the permit. In most cities, an unlicensed contractor cannot obtain a permit. Obviously, I cannot force a homeowner to get a permit if they don’t want to but I always inform them of the risks. Uninspected work may potentially not meet basic code and life safety requirements and the contractor may be taking short cuts as he/she knows the work won’t be inspected.

    I also wanted to point out that most residential remodels can be handled by an interior designer (not to be confused with an interior decorator pls). Typically, that will cost the homeowner less than hiring a licensed architet. Also, interior designers are in general better versed with kitchen and bath design and finishes and fixtures as that is their bread and butter in residential remodeling. But make sure the interior designer you hire can produce the construction drawings and pull the building permit besides helping you select cabinets, flooring, countertops, lighting, etc.

    And yes, the remodeling process can be painful and it typically will cost a bit more and tends to take a bit longer, at least in the SF Bay Area. But to be fair, oftentimes that is driven by the homeowner expanding the scope of work during a remodel or because we find dryrot, leaks or other issues that need repair or trigger design changes. But after all the dust (and debris…) settles, I have to say my clients are always super happy with the exeption of perhaps 1 %. The 1 % out there who no matter what you can never please or who will always complain about something. C’est la vie…

    Last but not least, I believe remodeling activities will be picking up some more due to the current market conditions with super low inventory of homes to buy and high mortgage rates. Also, the new trend of Aging-in-Place is becoming more and more popular. Age proof your home for muliti-generational living and delay moving into expensive assisted living for as long as possible. Full discloure, I did become an Aging-in-Place Design Specialist CAPS/NAHB last in 2022.

    Good luck with your remodel and if I can answer any questions let me know.

  2. I’m a contractor. Get a permit if you are planning to change in any way the shape of your building. If you don’t plan to change the envelop of your building, don’t get a permit if you want to do the work yourself (Kitchen, bathroom, attic, basement remodels) I would advise in the later case to get a throw away permit (For work that you’ll never get inspected) like dryrot fixing permit, replacement of garden windows, etc…You can post your permit in your window, keeping the nosy neighbors away. Don’t piss off your neighbors, don’t piss off your inspectors, don’t piss off anyone. Meanwhile learn about codes and regulations and don’t create a bond fire out of your house.

  3. Eli Richardson

    My wife and I want to renovate our house and basement next month, so we’re interested in learning if we need any type of permit to get started. We’re glad you explained how remodeling with permits helps us make sure our project will be inspected for any safety issues, so we’ll look into it for sure. Thank you for the insight on how to make sure our renovation goes according to plan and doesn’t put our family in danger.

  4. I have a large 4500 square foot 1906 duplex in Berkeley, much of it in original condition. I have two rooms that I want to turn into a small studio with a separate entrance. If I go through the permitting process for these two rooms is there a risk that they will inspect the rest of the house and force me to bring everything else up to code? I similarly want to replace all the windows. If I get permits for the windows do I risk them looking at and requiring me to upgrade other things? I’m worried about opening Pandora’s Box. Thanks!

  5. Great article yet I still find it hard to believe the house you pictured sold for over $2,000,000. If I got anything out of this article, it would be to question why anyone in their right mind would live in San Francisco! Of course I do understand why many live there as wages are much higher than in most parts of the country but still, choosing to pay that much money to live in a house like that just seems insane.

    1. Which is why a lot of Bay Area people in recent months are buying coastal San Diego properties right now as a “discount” to them.

    2. I am in Sacramento and just about all my neighbors are from the Bay Area. There is a breaking point…

  6. In my jurisdiction sometimes pulling a permit depends on either who’s doing the job (homeowner or contractor) and the dollar amount. For example, I could lay some new ABS for a plumbing job myself sans permit as long as the work was under $700. If I hire a contractor, the ordinance says I need a permit for the same job.

    Curious if you’ve pulled any numbers which show at $xxx amount it makes sense to pull a permit, vs not. –It probably varies on the job. But perhaps other readers have anicdotal thoughts on when and what they pull a permit on vs not, and where they draw the line themself.

    I generally don’t on the smaller DIY jobs. I think for me a lot of it is based on my confidence level, or willingness to tackle the task. But there are other jobs which I have hired out where I absolutely pulled the permit.

    Also, in my experience, altering staircases or steps in any way is a big trigger for headaches in the permitting process. We’ve always left them alone.

  7. Henrico Alves

    In fact USA is becoming a country where rich will be taxed in EVERYWAY possible. Non-stop till they all flee to other countries. Sad.

    Texas and South Dakote will become safe-spaces, if you will.

  8. I am glad you created a post on the cost benefit analysis of remodeling with or without permits. I always recommend my customers to obtain permits because of the heavy fines the Building Department imposes on the homeowners for working without permits. It is not worth skipping the filing and permitting steps because doing so will jeopardize the project, and the fees associated with filing and permitting are usually much lower than the construction fee.

    At the end of the day, homeowners are the ones who suffer the most not the contractors. Homeowners not only need to pay for the fines, but also need to attend court (in some states) to explain why they did not follow the building code. Also, the project is now up in the air because it is stop until all the open violations are resolved, which create delays and increase cost to the project.

    1. Yes, that is true on the homeowners suffering the most. But the contractor suffers too as he can’t get paid if the project stalls out.

      My neighbor brazenly built a deck facing the road without a permit. His father in law bought the house for him and the FIL is a GC. The city somehow found out and he said he had to pay a fine equal to 10X the cost of the permit and more. Said it was over $10,000 fine.

  9. spaceassassin

    I guess I didn’t realize permits were optional in California.

    I know laws vary across the country dramatically regarding when permits are necessary, but in litigious California, a permit is required for nearly everything–and that’s not a bad thing.

    We completed an addition and gut on our current home in 2016, all permitted using a licensed contractor, and are getting ready to do it again on a new home we just purchased with the permits necessary.

    Maybe working in large-scale construction and experiencing what I have in the field jades my perception, but permits are a necessary part of the process. Inspections are key to ensuring building codes, plans and construction are in sync with one another. Of course there are lame-duck inspectors who slack off, barely walk the site or perform inspections, but it doesn’t excuse the necessity of pulling permits nor release the city’s liability when signing off.

    For me the scenario analysis is quite simple, visit the city’s website, verify if a permit is required, if so, submit accordingly, and if not, proceed accordingly.

    (Your reference to the Millennium Tower hits home for me as it’s the industry I work in and I was reading papers and opinions about it in ENR years ago when the problems began. A great example, and one of just many reasons for permits and good inspections. Although the scale is dramatically different than a single family residence, the importance is just the same.)

    1. If only the city made getting a permit easier. To get a permit for an ADU can easily take 6 months.

      I big reason why my permit pulling and remodeling experiences aren’t great is because my contractor is a poor project manager. He also has too many jobs and can’t focus. The only good thing is that he’s cheaper than others.

      I do have a friend who did a multi-million dollar remodel and is stuck in litigation. So, high-end is to necessarily a guarantee either.

  10. Great overview. There are a lot of decent inspectors that take the safety of the construction seriously and manage the bs of contractors well. (Probably done 5 projects with and 2 without permits in Midwest)

    There are down sides of getting permits but the cost/benefit analysis above is pretty solid. For little stuff skip the permit but for structural, big plumbing and electrical get the permit and get a good contractor.

    If the guy wants a kickback, video tape him them blackmail him back and still turn him in to the feds. :)

    1. Hah! Yes. Keep your phone recording on and in you pocket whenever the inspector comes out!

      During the construction and inspection process, it can be very nerve wrecking. But after it’s done, it generally always feels worth it.

  11. Two things I learned from this post: I had no idea you needed a permit to get a remodeling done, depending on certain jurisdictions. And 2. Corruptions are pretty common in America as well.

    I’m starting to think even though we have laws combating and fighting corruption, it happens the same amount but it’s just that we don’t hear about it more often. Kinda me wonder what am I doing all of these things the right way for? Time to make some politician friends!

    The remodeling does sound like more trouble than it’s worth if going through a permit, especially since it takes up to 2 years for it to get approved. Another factor to think about when deciding to make a purchase.

    1. This is a case where people who know can take advantage of people who don’t know. For example, people who don’t know they can expand their home or Remodel with ease, might sell at a lower rate than they should.

      How many veteran contractors will bid aggressively for properties that might have some funk on it that scares away the general population. Because they know what to do.

  12. Thanks for the post! This is a topic I’ve struggled to find detail on.

    Given a long term desire for a swim spa and concerns about using public pools going forward due to the pandemic we’re considering placing one in our backyard and adding some concrete for it. Curious if anyone here has any experience with with either permits for concrete pads/paths and/or swim spas? From what I’ve read concrete is generally OK while a swim spa can be treated either as a hot tub which generally doesn’t require a permit (I think) or a pool which generally does.

    I plan to speak to the county office on this to get clarity since I can’t figure it out based on their website.


      1. Thanks and agreed!

        It’s unique too because the electrical is already there for a hot tub so it’s more of a concrete and swim spa structure question. To the local government office!

        1. You can search on your local building department website to see what kind of work requires permit. If there is excavation and structural work involved, then it most likely will need a permit.

  13. Lots to say on this topic but I’ll save it for now. One comment though is to check your bylaws too. In the event you have an HOA some require permits as part of modification approvals. I went through that BS with some of my rentals. Anyway, last thing you want is the money hungry board trying to hit you with non compliance charges and then having to pull the permit on top of it all. This didn’t happen to me, but I could tell that the references HOA board was likely to do so.

  14. I’ve done three projects in my house and it seems that changing the footprint is the trigger for the assessment people to appear. That project was the only one where my property taxes went up, although all three renovations were permitted.

    1. Definitely a big determinant. But if you say your kitchen remodel costs $20,000, there’s a good chance the assessor will just take on $20,000 to the value of your house.

      City’s need more revenue now than ever before.

  15. Canadian Reader

    Hey thanks for the post!
    It’s hard to really gain much information because there are no real costs discussed in the post besides standard permit costs in SF?
    Anyway, I’ve been through a few renovations with and without permits. The first one was a four- seasons sunroom addition to our old house where we pulled permits and were absolutely hosed on costs. The project manager still ordered the wrong window sizes, which delayed the project by 2 months and ended up with a sliding glass door with 18” clearance. The electrician never did complete all of the work in the scope and one of the light switches had incorrect logic for a 3-way switch. The flooring, baseboards, and painting weren’t included. The corner beads of the dry wall fell apart after the first season change. One of the pumps on the swim spa (part of the deck/ sunroom project) failed after 2 years because of an electrical issue. Our property taxes were grossly inflated compared to neighbours. When we sold that house the market wasn’t great- the sunroom definitely sold the house quickly because it looked beautiful, but we didn’t get back all the money spent. And the city signed off on all the crappy work. After this experience, I felt like it was worth taking some chance.
    Next project was a total house remodel with structural change/ ceiling vaulting, floor plan changes to all bathrooms and kitchen, all new windows/ electrical/ plumbing. Initially I called the city to get the original blueprints and none existed. I hired a structural engineer to draw blueprints (found through Craigslist). I went one room at a time with small scopes and agreements where I paid materials and the tradesperson billed for labour and demolition costs. Ultimately, the same tradesman rebuilt the whole house. He has plumbing and electrical licenses and a side gig on-call for city owned co-op maintenance. For this project I initially had 3 quotes submitted by renovation companies and the costs were 3-4x what I paid to have this house completed. In the meantime, the assessed value of the property has swung wildly due to a change in government, the pandemic, demand, interest rates, etc.
    In our situation the property lot size is huge with just one single family bungalow- but it’s zoned for a duplex with basement suites allowing for 4 addresses. If we were to sell, the most likely case would be a developer would buy it and rip down this house no matter how nice it is. This was the main reason we didn’t bother with permitting and additional costs. We are very happy with the house remodel and haven’t experienced any issues. We bought another house last August and kept our same tradesperson working because he’s awesome. I hesitate what to call him because he’s not exactly working in a contractor role.
    I totally understand that you can’t advocate for shady behaviour as a credible financial writer, but this area of finance is very interesting because so much money gets passed/ laundered this way.

    1. Sorry I couldn’t help you gain much information. I will try harder next time to be more thorough. The post is 3,400 words long so I thought it might be too long already. But good to know you want more. The permit costs in the chart are average permit costs in the country, but there are many variables and permit cost is not the main cost IMO.

      Would you like me to include more examples of how a permit cost raises property taxes?

      In your comment, you haven’t highlighted any costs to help us understand. Do you mind highlighting the specific permit costs, construction costs, and material costs? What were your property taxes? Would love to get exact details.


      1. Man, it’s tough being a blogger. I clearly see many permit costs you’ve highlighted in the post and the example of how a permit cost may not be the largest cost.

        “For example, let’s say the remodel costs $100,000. If your city charges a 1.5% property tax rate, you will have to pay an additional $1,500 a year in property taxes for as long as you own the home. If you plan to remodel and sell your home shortly after, this cost isn’t as big of a deal. However, if you plan to live in your house for decades, this extra cost of a permit really adds up.”

        Maybe Canadian Reader didn’t read the post thoroughly. And then to write a massive comment without any paragraphs or costs seems completely strange. Maybe English is her second language.

        I think most buyers don’t mind remodeling small jobs without permits. Even a roof seems fine b/c the inspector never goes on the rough to check. If the roof ain’t leaking, the roof surely must work!

  16. We’ve mostly done home improvement projects without a permit thus far. Installed sky lights, patio with roof, outdoor landscaping but it was because we did our homework and knew what we were getting into. And mostly, we didn’t want to have to pay taxes on them forever.

    However, when we build an ADU to rent out, this will be done with all required permits. This will be a serious investment and so there’s no question all the rules will be followed. And we expect it will take 1+ years to get everything completed.

    Thanks for the article – lots of things to think through!

    1. That’s good. You gotta officialize the ADU.

      Getting a permit for landscaping seems a little ridiculous if you’re just moving dirt around a flat land and adding stones and borders.

  17. I had no idea about permits until I bought a house. I did some bathroom remodeling once and did it with a permit per the contractor’s guidance. It was stressful but in the end I’m glad I did because we had to fix some stuff.

    I was shocked at how rude some of the inspectors are to workers. I was overhearing an inspector being curt to my plumber and his tone totally changed when I came into the room to see what was going on.

    You’re right about there being a lot of corruption too. I can’t recall how many times I’ve come across articles in SF Gate about how so and so was caught taking or making bribes for permits.

    Anyway so much helpful info in this post for newbies or anyone needing to remodel. Permits are a pita but in the end I’ve been glad I had one.

    1. I was shocked too at this electrical inspector tearing the subcontractor guy a new one. I guess it’s good for me, the homeowner. But the way he threw their power around and arrogantly treated the guy was shocking.

  18. Interesting post! It always surprises me when people do big remodels or room additions without a permit. I’ve heard that if you later want to do something that’s permitted, and if the inspector for that job finds out about an earlier unpermitted job, that they could deny your latest permit and/or fine you for not getting the previous job permitted. I haven’t had that experience myself, so I couldn’t say for sure, but the idea has always spooked me.

    I did a gut remodel of the upstairs of my house and got it permitted. I’m glad I did, for peace of mind and for resale. The square footage didn’t change, but the replacement parts were a whole lot nicer, and the layout of the upstairs is a million times better. What’s interesting is that my property taxes didn’t change AT ALL. I filled out the form, listing how much we spent on the remodel, and listing that it was replacement for what was already here. You have to list how many sinks, toilets, showers, tubs, etc. that you had before and after. We ended up adding one sink, but the rest of it was virtually the same in terms of numbers of fixtures. But we went from one fiberglass shower/tub combo to a huge tile shower and separate soaking tub, and on paper, the numbers looked the same. We also saved a lot of money buying fixtures and such ourselves and paying the contractor to install them, so when we listed the cost of the remodel, it was probably a bit lower than if we had paid for those things on the full contractor markup. Maybe that’s why we didn’t end up with an increase in our property taxes? In any event, we got the best of both worlds. The upstairs looks AMAZING, we have the reassurance of the permit, and our property taxes stayed the same. Phew!

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