Duplex with land approved to build upto 12 units
Investor · Santa Ana, CA · Member since 2019 · 35 posts · 2 votes
Good morning BP,
I came across a duplex that is in a zone approve to build upto 12 units. The duplex is pretty beat up and fair price for the market. What advice would you give to do my due diligence and make sure this is a true statement from the listing agent.
Any feedback or comments is much appreciated.
Thank you
@Christopher Aguilera contacting zoning as @Greg Dickerson mentioned is your first step. However, they will not tell you what can be built. They will tell you the restrictions. Once you understand the restrictions then it becomes a puzzle until you find the right design to maximize the square footage of the building. If you are in a big city or county most likely most of the zoning information may be found online.
First find out the zone. Then ask the following restrictions, setbacks (front, side, rear), height (does the penthouse count?), FAR (floor area ratio which is the max SF for the lot), lot occupancy (how much area can the building take up on the lot), green area ratio or pervious surfaces (a lot of places now require soft scale or where water can collect and not drain to the storm drain), parking requirement per unit (can the parking be offset if near public transportation), affordable housing, any view corridors to preserve, is it a historical neighborhood, minimum size per unit, and any public enhancements required? This may be overkill but if you don’t ask all these questions (I have experienced all of these at least once in various projects) it may ruin your profit.
Once you are done with zoning you need to go to the building department. The two big question for me is if you go over three floors do they require something other than wood frame construction. The second is in theory you can add 10 more units. That will require a much bigger water meter, water lateral and sewer. How much do those cost to upsize? For example in DC one of my clients had an existing 3/4” meter and had to go to a 1.5” meter. He had to pay $10k. These items can kill all your profit.
Good Luck.
Good morning BP,
I came across a duplex that is in a zone approve to build upto 12 units. The duplex is pretty beat up and fair price for the market. What advice would you give to do my due diligence and make sure this is a true statement from the listing agent.
Any feedback or comments is much appreciated.
Thank you
You can verify zoning with the city but just because the zoning allows for 12 units doesn't mean you will be able to fit 12 units on the property as you will have setbacks, lot coverage, parking requirements, etc to take into consideration in terms of site capacity.
Thanks Greg,
I will definitely call and find out and see if the property is big enough to maximize the unit count. It's a little over .5 acres but like you said just got to verify. Does the city provide all that information about property size, required parking, etc? Or do I have to find that somewhere else?
Thanks for your input!
@Christopher Aguilera Sounds like a potentially awesome property you found. I would recommend partnering with a developer or builder to see what you can get done. It is a bit complicated - all the zoning, and what is appropriate to fit on the lot. Then you also have the curb and curb size as well as traffic count that all could come in to play. A developer will know the ins and outs.
@Christopher Aguilera contacting zoning as @Greg Dickerson mentioned is your first step. However, they will not tell you what can be built. They will tell you the restrictions. Once you understand the restrictions then it becomes a puzzle until you find the right design to maximize the square footage of the building. If you are in a big city or county most likely most of the zoning information may be found online.
First find out the zone. Then ask the following restrictions, setbacks (front, side, rear), height (does the penthouse count?), FAR (floor area ratio which is the max SF for the lot), lot occupancy (how much area can the building take up on the lot), green area ratio or pervious surfaces (a lot of places now require soft scale or where water can collect and not drain to the storm drain), parking requirement per unit (can the parking be offset if near public transportation), affordable housing, any view corridors to preserve, is it a historical neighborhood, minimum size per unit, and any public enhancements required? This may be overkill but if you don’t ask all these questions (I have experienced all of these at least once in various projects) it may ruin your profit.
Once you are done with zoning you need to go to the building department. The two big question for me is if you go over three floors do they require something other than wood frame construction. The second is in theory you can add 10 more units. That will require a much bigger water meter, water lateral and sewer. How much do those cost to upsize? For example in DC one of my clients had an existing 3/4” meter and had to go to a 1.5” meter. He had to pay $10k. These items can kill all your profit.
Good Luck.
@Christopher Aguilera contacting zoning as @Greg Dickerson mentioned is your first step. However, they will not tell you what can be built. They will tell you the restrictions. Once you understand the restrictions then it becomes a puzzle until you find the right design to maximize the square footage of the building. If you are in a big city or county most likely most of the zoning information may be found online.
First find out the zone. Then ask the following restrictions, setbacks (front, side, rear), height (does the penthouse count?), FAR (floor area ratio which is the max SF for the lot), lot occupancy (how much area can the building take up on the lot), green area ratio or pervious surfaces (a lot of places now require soft scale or where water can collect and not drain to the storm drain), parking requirement per unit (can the parking be offset if near public transportation), affordable housing, any view corridors to preserve, is it a historical neighborhood, minimum size per unit, and any public enhancements required? This may be overkill but if you don’t ask all these questions (I have experienced all of these at least once in various projects) it may ruin your profit.
Once you are done with zoning you need to go to the building department. The two big question for me is if you go over three floors do they require something other than wood frame construction. The second is in theory you can add 10 more units. That will require a much bigger water meter, water lateral and sewer. How much do those cost to upsize? For example in DC one of my clients had an existing 3/4” meter and had to go to a 1.5” meter. He had to pay $10k. These items can kill all your profit.
Good Luck.
Well said.. I underwrited a few projects and the cost to build wasn't even close to the value of the property based on market cap and NOI based on 55% of gross..
Sometimes it just doesnt make sense and move on..
@Christopher Aguilera contacting zoning as @Greg Dickerson mentioned is your first step. However, they will not tell you what can be built. They will tell you the restrictions. Once you understand the restrictions then it becomes a puzzle until you find the right design to maximize the square footage of the building. If you are in a big city or county most likely most of the zoning information may be found online.
First find out the zone. Then ask the following restrictions, setbacks (front, side, rear), height (does the penthouse count?), FAR (floor area ratio which is the max SF for the lot), lot occupancy (how much area can the building take up on the lot), green area ratio or pervious surfaces (a lot of places now require soft scale or where water can collect and not drain to the storm drain), parking requirement per unit (can the parking be offset if near public transportation), affordable housing, any view corridors to preserve, is it a historical neighborhood, minimum size per unit, and any public enhancements required? This may be overkill but if you don’t ask all these questions (I have experienced all of these at least once in various projects) it may ruin your profit.
Once you are done with zoning you need to go to the building department. The two big question for me is if you go over three floors do they require something other than wood frame construction. The second is in theory you can add 10 more units. That will require a much bigger water meter, water lateral and sewer. How much do those cost to upsize? For example in DC one of my clients had an existing 3/4” meter and had to go to a 1.5” meter. He had to pay $10k. These items can kill all your profit.
Good Luck.
Thanks for all the great info Eric. It's a lot to consider and definitely will take some time to find out all the details with zoning and building department. I will contact them and ask these questions. I'll let you know what I find out from them.
Thanks again!
@Christopher Aguilera.
One other item to consider when building are local groups such as a neighborhood association.
When ran into issues on one development where the zoning was fine and we had the right plans for what we thought the highest and best use was...too bad the neighborhood association didn’t agree. There connections to city council put a big roadblock in our way!
Big lesson learned for me on that project.
Another example is a historical society. Do your homework on all of the parties that have influence in an area.