What should real estate investors expect?

Cities and neighborhoods change over time. When the needs of a community change, local government will re-zone an area and change the zoning classification. What was once agricultural land, for example, is now a community filled with brand new houses, shopping centers and industrial parks.

Reconstruction of property can be a lucrative opportunity for landowners to convert their property. They could build an apartment building in a historic district or take a parcel of land and build a shopping center in a rural area. But there are many considerations and a complete property reconstruction process to get it done.

What is zoning?

Zoning is a set of laws that governs land use. The primary function of zoning is to control what can be done with a portion of the property. Zoning districts indicate where various land-use activities, such as residential, commercial, or industrial, may be located. Zoning can control other things, such as density, height, yard barrier, and so on. However, land use is the primary concern.

Why the zoning change?

The main reason for changing the zoning is that the landowner sees an opportunity. What opportunities? This could be creating a residential subdivision, building an apartment building, or converting a house into an office. It could be countless other things. However, the opportunity may not be allowed under current zoning law. Thus, the landowner must apply for a change in that law.

How do you change zoning?

Changing zoning can be difficult and expensive. This can be a really complicated process depending on where the property is located. And there is no guarantee that the re-application will be approved. Landowners need to know these facts.

Basically, it goes like this: The landowner applies to a board of directors to change the area of ​​a property. Difficulties and costly occur, in part, because there is no standard zoning ordinance. Each city, including zoning, each city and county can create its own permissions, laws, restrictions and procedures. Even in cities right next to each other, zoning laws can vary greatly. Changing zoning is also a political process. There are public hearings, and you have to get legal approval. The political process can be quite costly and ugly.

Since each place is different, I can only write in very general terms how to change the zoning of your property. There may even be instances when attorneys have to be involved in the process. No article can cover this completely.

In general, what to do if landowners think about changing the zoning of their property.

More about zoning from BiggerPockets

1. Look around the property

What things are changing around the property? Has the situation changed in the surrounding property? Is there population growth? Are there any new roads or sewer lines that have changed local dynamics? As the applicant, the landowner must justify the proposed change. Just because a landowner wants to do it is often not a reason enough. Some will give a lot of respect to the landowner’s rights as the owner of local property, but many will not and they will be quite limited. Therefore, it is best to be able to justify the request with the changed circumstances.

2. Learn local rules

Applicants must read the rules online. They need to figure out what the current zoning is and what can and cannot be done at present. Then, they have to go and talk to the local planning department. The applicant does not have to be very precise at the beginning if they do not want to be, but they should be aware that the staff can have a great impact in the coming days. Staff will review and recommend reconstruction requests. So applicants should put their best foot in front.

3. Talk to your neighbors

If anything is going to stop you, they are. It is best to talk to them in advance about the plan and any concerns. They will probably get notified anyway, so the applicant should not think that they can put things under the radar. Applicants want to make the plan as smooth as possible for staff and elected officials, who will eventually vote on the request. But remember, you can’t make everyone happy. Some people will have a NIMBY (“not in my backyard” attitude every time. But you have to try.

4. Apply for re-zoning of property

Planning staff will have the necessary forms and will be able to help and guide the applicant. The applicant must confirm everything requested by the planning department, which can be many. This may include topics such as surveys, maps, traffic studies, and mailing labels. And don’t forget that there will be a fee to process the request. How much? It depends on the locale. Bet on at least a few hundred dollars, if not a few thousand.

5. Application review and staff analysis

Planning staff will review the request and make an analysis and recommendation for local planning commissions and legislation. The applicant should be as much a part of this analysis as possible. Should be available to help them. They have to give everything and the planning staff will do whatever they want with a smile. The applicant must meet with them at the property during the site visit and show them exactly what the plans are. Their planning staff needs to know how they have already met with neighbors and adjust their plans accordingly. If possible, the applicant’s planning staff should listen to arguments and concerns and revise plans to meet those concerns.

6. Planning Commission Meeting

Once the planning staff has completed its analysis, the request goes to the Planning Commission (or some similar body) for a recommendation to the local administration. This is a public meeting that will be advertised. The applicant must be there to sue them and answer any questions or concerns. Hopefully, the Planning Commission will make a positive recommendation, but the applicant does not necessarily need one to move forward.

7. Meetings of the Legislative Assembly

Eventually, the case goes to the local legislature for a public hearing and vote. Applicants will have the opportunity to speak and sue them. If the vote goes their way, they better go. If not, the applicant may have to wait at least a year before retrying.

How long does the process take? It depends on how complex the jurisdiction, rules, and request are. For something simple, it will take at least a few months – but from six months to a year it is unheard of.

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Other considerations

The above seven steps are generalized and very simplified. Landowners can consider a few more things when considering zoning changes to their property.

Beware of limited deals

Whatever the zoning, limited contracts win. If the landowner spends time and money to get the rebuilt property for office use, but the contracts do not allow, they will lose. I saw it happen. However, not every property is subject to a limited contract. Landowners need to know if they are covered by a limited contract and what they allow before proceeding.

Zoning is political

Politics can do strange things. Understand that politicians do not always make decisions based on what is right or best for the property owner. They make political decisions. If the request creates a political battle, it might be better to wait and try again later – say, after the election is over.

A counselor can guide you through the reconstruction process

Since zoning can be a complex and political process, the applicant can benefit by hiring someone who understands the political arena. Although expensive, a consultant can be necessary and costly.

Why go through this process?

Reconstruction of property can be very profitable. Understanding the zoning process is another arrow to shake an investor’s real estate. It can help them see and create opportunities that others will miss.

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