The world of real estate is in a state of almost constant flux. The pandemic, combined with the seismic shift from commuting to working from home, has changed the way space in many areas of the country is used. The need for commercial space has taken a dip in some areas, prompting property owners and visionary investors to rehab vacant commercial property into residential spaces.
Conversion Advantages
Converting commercial property to residential can be a lucrative investment strategy. It can save you from the cost of holding onto a vacant commercial space in an area with little commercial demand. And right now, South Florida rentals can bring some of the most lucrative income streams on the national real estate market.
So, whether you want to convert a structure you currently own, or you’re looking for a new investment opportunity, here’s how to switch a property from commercial to residential.
Zoning
You need to be aware of the local zoning laws in the area in which the property is located. You should research these local laws before searching for suitable properties. You can find out about the zoning laws in your area with a little online research and by contacting your local planning and zoning department.
Rezoning a property is the most important step in the process. Without it you can’t move forward on your conversion. Here are the basic steps to get your property rezoned:
Apply for Rezoning. First you must fill out an application from the local planning department and pay a fee, which varies depending on the size of the property you are rezoning and can range from $500 to $5,000 or more.
Plan Analysis. After you’ve submitted your application, the planning department will analyze your plan. If the planning department raises any arguments against the plan, you will need to make adjustments.
Commission Meeting. Your petition to rezone will be made public so that local citizens are made aware of your intentions to rezone. Then a public commission meeting will be held, giving the public an opportunity to raise any concerns. This also gives you the opportunity to explain your plans to the community.
Legislative Body Meeting. This group will make the final decision. If they reject your plans, you will have to wait a certain time period before applying again.
Conversion Challenges
The rezoning process alone can take several months, before work has even begun on the renovation. You will need to consider not only the cost of the renovation but your holding costs as well. Then, once the rezoning is complete, if it has been approved, the real work begins. Below are a few tips for navigating the process.
Expect Challenges. Commercial structures are not designed to be lived in, so know that you’re going to face some roadblocks. Load-bearing walls, natural lighting, ensuring proper airflow, and privacy are a few common concerns that crop up when converting from commercial to residential, so learn to roll with the punches. Have a plan in place for how to deal with these and other issues, and address them during the planning process. Nothing drives up construction costs like discovering a wall is load-bearing and can’t be moved, or that the HVAC and electrical systems need to be completely reconfigured.
Get the Neighbors on Your Side. Neighborhood pushback will weigh against you when getting approval, so talk to the neighbors and let them know what you intend to do and how it will be a net benefit to them and the neighborhood.
Converting a property from commercial to residential is not without its challenges. But if successful, it can be a lucrative and beneficial solution for areas with unused commercial structures and housing shortages. By understanding these challenges, you can take advantage of this creative real estate investment solution.
Attorneys David E. Klein, Esq. and Guy Rabideau at Rabideauklein.com are Florida Bar Board-Certified. Their firm has successfully served South Florida’s high end real estate market for over fifteen years. Our clients depend on us to provide the utmost discretion and integrity when navigating this special market. Contact Rabideau Klein to discuss the legal implications of your next property transactions.