Zoning And Other Important Considerations For Commercial Investors By Tony Seruga, Yolanda Seruga And Yolanda Bishop At Isnare.com Ezine Articles

There's more to development than just financing and construction for a commercial real estate investor. Other factors that directly impact how your development projects work include "playing nice with the neighbors", which, when it comes to development, means being aware of zoning and other considerations when examining a parcel of land.

Zoning is the short hand term for "civic planning and development", the process by which your local municipality encourages (or discourages) patterns of growth, including residential, commercial, retail and industrial. Zoning ordinances are one of the most contentious political issues on the local level, and changes to zoning ordinances often times require campaigning that lasts for years. The reasoning for this is that the city has to represent the goodwill of everyone who lives there, and no matter how innocuous a zoning change proposal is, someone will find that it interferes with what they want to do with their parcel of land. The city will want to have an oar in the process, because land zoned for commercial, industrial or retail use generally merits a higher property tax rate (which drives most city funding) than residential or "yet to be determined" zoning.

Zoning impacts everything, and it even covers vacant lots (or, more specifically, it especially covers vacant lots). It is the primary tool for setting property tax rates, and will impact subdivision rights. Zoning will determine where road easements and utility hookups are laid out, and to what standards, and it's pretty much the blueprint the city has built for regulating its own growth. Because each city and county does its own zoning work, each one has idiosyncratic zoning regulations; don't assume that a zoning code means the same thing in each municipality. Always take the time to learn what the local zoning regulations are. As an added benefit, this gives you insight into the zoning process for the city you're in. If it's ever necessary, this will tell you how likely it is that you can get zoning regulations changed.

Beyond the zoning requirement, you also need to look at how your plot of land fits into the overall pattern of land usage. In order to develop a plot of land, you need to have legal ownership and legal access. Some plots of land are completely land locked, and different municipalities have different standards for what constitutes legal access. In more rural areas, a dirt road is enough; in others, you have to have an improved "all weather" road to maintain legal access.

You'll also want to triple check that your intended use of the land is permitted, and that the topography will work for what you intend to do with it. Is there adequate drainage, for instance? If there isn't, what directions can you landscape drainage to, and is that sort of work permitted by the land usage board? Before you break ground or move earth, check the county assessment records on the land, for what prior owners have built or had issues with, and hire an environmental expert to go over the plot carefully.

Is your plot zoned for the kinds of businesses and buildings you want to do, and are there any lingering environmental issues hanging over the plot? What sort of infrastructure hookups are available, such as sewer, water and utility connections? If you don't have a sewer hookup, can you use a septic tank? Is the land cheap because there's something that makes it unusable? These are all things to investigate before making your close offer on the parcel.

What existing structures exist there now? Are they useful to you? Will their foundations be something you can re-use if you have to tear them down, or will those have to go as well? For that matter, what kinds of structures are on neighboring plots? How are the neighboring plots zoned? These all impact what the value of the property is now, and how it'll change over time. Don't underestimate the effect of neighboring plots on the value of your real estate investment.

If you're going to be developing subdivisions as a commercial investor, look carefully into the local ordnances for them. As always, use the standard, common sense approach for making a real estate investment: Look at how much the land is worth now, decide if you're going to buy and hold, or buy and flip, and look at the long term demographic trends before you buy. For example, if you know a business is moving into that part of town, ask what kind of jobs they offer and at what pay scale, and consider investing in housing at the appropriate price points and rental levels.

Likewise, if you know a subdivision is going up, buying up the handful of plots within easy walking and driving distances zoned for retail and commercial use can quickly have those plots rise in value, because they're the logical places for people to shop, go to work, and take in leisure time activities. (This is the fundamental driver in the placement of strip malls and small movie theaters; the plots are sold in central hubs that have subdivisions and apartment housing zone around them, to become a focus for jobs, entertainment and shopping.)

All of this starts out with due diligence paid at your local city or county planning office, and finding out what plots are owned by whom, with what access, and zoned for which purposes. The city has put a lot of effort into planning it's growth, and as a commercial real estate investor, you should make the time to take advantage of it.

Published At: Isnare Free Articles Directory http://www.isnare.com
Permanent Link: http://www.isnare.com/?aid=211778&ca=Business

Important Notice DISCLAIMER: All information, content, and data in this article are sole opinions and/or findings of the individual user or organization that registered and submitted this article at Isnare.com without any fee. The article is strictly for educational or entertainment purposes only and should not be used in any way, implemented or applied without consultation from a professional. We at Isnare.com do not, in anyway, contribute or include our own findings, facts and opinions in any articles presented in this site. Publishing this article does not constitute Isnare.com's support or sponsorship for this article. Isnare.com is an article publishing service. Please read our Terms of Service for more information.