While quickly scrolling through and evaluating deal after deal, an investor typically fails to take a look at the municipality’s zoning map and see if the property they are considering putting in offer in is in a redevelopment zone. They would only look at the property’s existing use and see what the end value should be upon completion of a rehab of the existing structure or a new structure with a similar footprint/use. This will lead to many lost opportunities to capitalize on a property that has in-place approvals allow for high density developments - especially in urban areas where redevelopment zones are plentiful.
We found substantially dilapidated two family homes on a single oversized lot. Based on the price the owner was demanding, the deal would be extremely tight if you were purchase and renovate it as an existing four family. However, when looking at the immediate neighborhood I saw other new construction buildings and wondered if the subject lot fell within the same zone as those larger buildings. I reviewed the city’s zoning map and confirmed that our lot was also in a redevelopment zone, and it allowed for a four story development with 100% lot coverage.
The only limiter on density was the parking ratio of number of spaces to the number of residential units. A back of the envelope analysis revealed that the subject lot would support approximately 30 residential units. We then immediately went to the neighbor’s home to see if they would be interested in selling at market value subject to us getting approvals, and he indeed was. With the neighbor’s lot it appeared the development could now include a total of 40-50 residential units. Although a project of this size it too big for our firm to take on ourselves, we know what the market value of approved land is in this particular city and we would be able to either wholesale it to a larger developer, or accept a lesser amount in exchange for remaining in the deal.
This deal never would have been found if not for the research that went into identifying the prevailing zoning regulations. Even if you are not able to go forward on a large scale development yourself - you are in the driver’s seat once you have the properties under contract and will be able to monetize it by either selling it or partnering with a credible developer. Contact us to find out how we can help you.