How to go about this...

Question

Hey,

I am looking for some help and guidance on how to go about making this deal happen.

There is a building for sale listed on the MLS that is currently used as a church. It is zoned public institutional and would need to be rezoned to residential. My idea is to convert the space into a 4 plex residential building. I have not viewed the building in person yet, but I am thinking 4 - 2bed/1 bath units.

I guess my question is, how do I go about making this deal happen? Vague, I know, but some guidance would be great from all you experienced pros out there. How would you approach banks/lenders for financing?

If you need more details, I am more then willing to provide.

Thanks,

Steve

Steven Lalonde · Answer

Hey,

Thanks for the replies so far.

I have looked into rezoning and have had other properties under contract with rezone subject, but ultimately I did not close on them due to other reasons. Other properties that I have had an accepted offer on, did not want to "wait" the rezone period, so I backed out and didn't close on those either. I know and understand the process in my area to rezone, and for my level of risk, I would need to have the rezone subject in the agreement. I could not buy this building in the hopes of the rezone to go through, only to find out that I could not get rezoning...then what do I do with the building.

In my area, the demand for rentals is high. So I "think" the rezone would go through, and like Brandon Halley mentioned, adding some value and curb appeal is what I do with all my properties. I want mine to stand out from the competition and have people rent my units first.

On that note, would people suggest getting an accepted offer on this or any building with the subject to rezone, then approach banks and lenders for financing?

I also have a very good idea what the renovations would cost as I am half way through a substantial basement suite renovation. This potential building would have much of the same renovations, times 4!

Any other tips, advice or guidance people can provide would be stellar!

Steve

Seth Williams · Answer

Prob best to talk to the local lender you use, or a lender that would specialize in this type of construction or renovation financing....From there, if the deal seems possible, then try and get it under agreement, but put in some strong contingencies, ie, subject to re-zoning approval, subject to financing, etc. This way, you could tie up the building and continue your due diligence. Obviously, its nicer to do all this stuff before hand, but if you can't, that's the other option. Then you can still re-zone, get plans, and even sell the project to the next investor and probable make a good turn on your investment. Just my thoughts, and if this is your first project, id take on something smaller. This could be a lot to chew off, even for someone who is experienced. Good luck!

Brandon Halley · Answer

I have looked into buying a property a few times for re-zoning. I would suggest calling the local planning dept to see what the process is as it varies slightly for each location. For me, it involved getting approval by the planning department and then going to a vote at the city council. In general, the project has a better chance to be approved if it supports the cities direction and goals. Perhaps affordable housing is in high demand and a local problem and the city would love to see some more of it and already has lots of churches... Also the cities always like it when you make public improvements at your own expense which can be a selling point, such as getting service lines buried, off street parking, decorative landscaping etc. Show them you are willing to pump some money into the local ecosystem. I used to rock climb in a church converted to rock climbing gym in Dayton, OH that was super cool. You could climb all the way up inside the stained glass steeple.