Hello my name is Clint. My friend and I have been talking about this Idea that I came up with 3 years ago while I was renting a room in a 100 year old house. I wanted to buy that old house and remodel it to be six separate apartments. Now the idea is to buy said house and burn it to ashes and claim insurance money to build. I'm just kidding. We well demolish it and build. Once built and renting we well refinance. Kind of like the brrrr strategy but its the bbrrr - buy build rent refinance repeat. The problem I come to is that the land the old house is on in zoned industrial with a use of multifamily. The house was there before the land got zoned as industrial so it was grandfathered the multifamily use.
My questions are if the house is demolish and the land is zoned industrial can apartments be built on the land? or, does the zoning have to change to residential R2?, can it be changed? and if not can it be changed to Commercial and have apartments built?
I'm really curiously what you might know in this topic.
Have ran into this prior. There an argument that you could replace use for use... But you would need to get that in writing from the city..? And I mean all the city offices that could kill the deal. Also check the master plan for that area of the city. If it was rezoned, chances are they man tell you no and how they were simply waiting for your old house to be sold off and or to become delapitated enough to where they could successfully through Heath and safety laws, force it to be demolished.
Lastly, I would seriously pencil out the financials to assesses if the ROI is strong enough to support the new construction option. All items from IRR, to plans, to any utility upgraded you will be responsible for to meet the CURRENT "CODE" for all trades , dirty work aside from demo, drainage is ALWAYS a major concern and will require engendering, will you have to install and or improve of site land or hardscape, disability access requirements, and a number of other factors..... Just wanted to through some of there to get your top thinking about the real costs to handle such an embarkation. . Might be a better financial move to do a major remodal.... But bottom line is the numbers as an"Investor" should be driving your decision making...
Thank you for your attention to my topic Rob Harris .
If the land was rezoned to industrial could it be rezoned to Commercial and are apartments able to be built on commercial land?
The idea is to get a million dollars and use 40k for the down payment on the home and land I'm think 50k for demolish. Use the rest to construct two building with 4 20X20 apartments on the first floor and two 40X20 apartments on the second floor a total of 12 units. My gues-stament would be about a year to complete.
As a property developer and a building contractor do you think that is possible with that amount of money and time?
My first inclination from what I have heard is I don't think you can make that happen, especially if you don't have history of doing such. If you had a lot more money/skin in the game you would stand a better chance..... "Hoping" you can get it rezoned after buying is a very expensive gamble. You could always make the purchase contingent on such zoning, but you would have to do some really hard selling to the city why it "needs" this project done in the location. --- One thing is that each municipality has it own zoning regs with stipulations directly applicable to there jurisdiction. For instance, you might be able to get a piece for property rezoned form Lt. Industrial to Commercial,,,, and that commercial zoning designation covers a plethora of developmental possibilities.... They will have a bunch of different options BUT, you have a get an (SUP) Special Use Permit for building what you want to build. In that process aside from the zoning change can be lengthy and all of this is open to public comment, in support of and why it's not supported. And as I stated prior, if your project does not coincide with the cities master plan, it will be a hard sell to go against it. And even if it is a good idea, they know once they start approving planning outside of the master plan, that will open them up for criticisms, etc.... You can't expect the to go to bat for you, unless there is some HUGE benefit in it for them...
Even if you had the cash to buy said property and had, the 40k down (plus significant reserves), I still think banks would shy away from your deal.... A project of such scope, you would have to significantly articulate to the bank how you can do it without any problems,,, even though it's construction and their are always problems..... If you don't have the expertise to put them at ease you would have to show significant ties to someone who has and that they also have skin in the game.
Bottom line is that IF you have the capital capabilities and you have performed a thorough needs assessment (all that will have to be presented to banking institution and to the city) and you still come back to the question,,,, is the risk worth the return,,,,,, ???
There are a lot of things to learn when biting off a project of this magnitude, so I would encourage you to grab a local mentor to help you through the process. A lot of moving parts will have to be thoroughly addressed...
Your ambition and (rough) plan is great. There are just too much unanswered questions and uncertainty. I currently work in an architecture firm that deals with developers all the time with the same concept at grasp. Of course, I deal with larger buildings (100 up to 1500 unit Type I, III, and V mixed-use projects), the process is not much different. You just need to come up with a more concrete plan, run the performas, and really pencil out if the investment is worth it in the end. New construction is not cheap and the process from feasibility all the way to occupancy is long. Zoning can always be changed, in the interest of the city and not yourself. City won't care about your profits, they would be more interested that you're building a multi-family because the neighborhood demands it and lack of residency vs job availability is asking for more homes to be made available and you're there to fill that void. I deal with city planners and council 2-3 days a week, the process is never of your own interest but how your project will better the city.
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