What can real estate investors expect?

Cities and districts change over time. When the needs of a community change, the local government will reallocate an area and change the zoning. For example, what was once farmland is now a community filled with brand new homes, shopping malls, and industrial parks.

Land reassignment can be a lucrative way for landowners to convert their property. You can build an apartment building in a historic neighborhood, or you can take a plot of land and build a mall in a rural area. But there are many considerations and a whole real estate repurposing process that must be followed to achieve this.

What is zoning?

Zoning is a series of laws that control land use. The main function of zoning is to regulate what can be done with a property. Zones determine where different land use activities, such as residential, commercial or industrial areas, can be located. Zoning can regulate other things like density, height, yard throwbacks, and so on. However, the focus is on the use of the property.

Why change the zoning?

The main reason for changing the zoning is because the landowner sees an opportunity. What are the options? It could be developing a housing estate, building an apartment building, or converting a house into an office. It can be a myriad of other things. However, according to the applicable land use law, the opportunity cannot be permitted. Therefore, the landowner has to apply for a change in the law.

How do you change the zoning?

Changing the zoning can be difficult and costly. It can be a very complicated process depending on where the property is located. And there are no guarantees that the reallocation request will be approved. Landowners need to be aware of these facts.

Basically it works like this: The landowner applies to the board of directors to change the zoning of a property. The difficulty and the costs arise partly because there are no uniform zoning regulations. Each zoned city, city, and county can have its own permits, laws, restrictions, and procedures. Even cities that are right next to each other can have very different zoning laws. Changing the zoning is also a political process. There are public hearings and you need to get legislative approval. The political process can be quite costly – and ugly.

Since every location is different, I can only write very generally how to change the zoning of your property. There may even be cases where lawyers need to be involved in the process. There is just no way that one article can cover everything.

In general, here’s what landowners need to do if they are considering changing the zoning of their property.

More about zoning BiggerPockets

1. Look around the property

Are things changing around real estate? Have the conditions changed in the surrounding property? Is there a population growth? Is there a new road or sewer that has changed the local dynamics? The landowner as the petitioner must justify the proposed change. Just because the landowner wants it is often not enough. Some places will show great respect for the landowner’s rights as a landowner, but many don’t and they will be quite restrictive. Therefore, it is best to be able to justify the request with changing conditions.

2. Learn the local rules

The petitioners need to go online and read the rules. You need to find out what the current zoning is and what can and cannot currently be done. Then they need to speak to the local planning authority. The petitioner does not need to be very specific at first if he does not want to, but he should be aware that the staff can have a great influence in the coming days. The employees will review the application for reallocation and make recommendations. Petitioners should therefore do their best.

3. Talk to your neighbors

If anything is holding you back, it’s them. It is best to speak to them beforehand about the plans and remove any concerns. You will most likely be notified anyway so the petitioner shouldn’t think he can keep things under the radar. The petitioner wants to make it as smooth as possible for the planning staff and the elected officials who will eventually vote on the request. Remember, however, that you cannot please everyone. Some will have a NIMBY (“not in my backyard”) attitude all the time and every time. But you have to try.

4. Apply to reallocate the property

The planning staff has the necessary forms and can help and guide the petitioner. The petitioner should make sure that he delivers whatever the planning department asks, which can be a great deal. This can include things like surveys, maps, traffic studies, and shipping labels. And don’t forget that there is a fee to process the request. How much? It depends on the location. Bet on at least several hundred, if not several thousand.

5. Application review and personnel analysis

The planning staff examines the application and prepares an analysis and recommendation for the local planning commission and the legislature. The petitioner needs to take part in this analysis as much as possible. They should be available to help. They have to offer everything the planning staff ask with a smile. The petitioner should meet them during the site visit at the property and show them exactly what the plans are. You need to tell the planning staff how they’ve already met with the neighbors and adjusted their plans accordingly. If possible, the petitioner should listen to the arguments and concerns of the planning staff and revise the plans to address these concerns.

6th meeting of the planning commission

Once the planning staff has completed its analysis, the request goes to the planning committee (or similar body) for a recommendation to the local managing authority. This is a public meeting that is advertised. The petitioner must be there to bring his case and answer any questions or concerns. Hopefully the Planning Commission will give a positive recommendation, but the petitioner doesn’t necessarily need one to proceed.

7th session of the legislative body

Eventually the case goes to the local legislature for public hearing and voting. The petitioner will have the opportunity to comment and present his point of view. If the vote goes its way, then you’re good to go. Otherwise, the petitioner may have to wait at least a year before trying again.

How long does the process take? It depends on the jurisdiction, the rules, and the complexity of the application. For something simple, it takes at least a few months – but six months to a year are not uncommon.

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Other considerations

The above seven steps are generalized and very simplified. There are a few other things landowners should consider when considering changing the zoning of their property.

Pay attention to restrictive agreements

Regardless of what the zoning allows, restrictive agreements win. If the landlord spends the time and money to turn a property into office use but the agreements don’t allow it, he will lose. I saw it happen. However, not every property is subject to restrictive covenants. The landowner needs to know if they are subject to restrictive agreements 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. You make political decisions. If the request leads to a political battle, it may be best to wait and try again later – for example, after the election is over.

A consultant can guide you through the rezoning process

As zoning can be a complicated and political process, the petitioner could benefit from hiring someone who understands the political terrain. Although costly, a consultant can be necessary and well worth the cost.

Why go through this process?

Real estate repurposing can be very profitable. Understanding the zoning process is another arrow in an investor’s real estate quiver. It can help them identify and create opportunities that others will miss.

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