Developing a portfolio of real estate investments can create a stream of revenue. It can also help investors multiply their personal resources. Taking vacant land and developing it into a thriving strip mall with numerous small businesses can be a lucrative endeavor.
People with commercial properties in their portfolios may look for long-term tenants and other ways to optimize revenue while diminishing management expenses. Converting existing facilities to serve different purposes can be a way to maximize the value of a real estate investment. Those with vacant warehouse buildings or office buildings with few tenants may consider the possibility of a residential conversion project.
Updating a commercial space into a residential facility featuring condominiums or apartments can be a very lucrative endeavor. However, investors often need help managing the various challenges of redevelopment. What issue may arise when attempting to convert offices or other commercial spaces into residential facilities?
Zoning issues
The first issue that investors and owners need to consider is zoning. Property use is subject to restrictions based on current zoning. Those hoping to modify a commercial building to provide residential housing need to address the zoning of the property.
In some cases, they may be able to obtain a zoning variance. Other times, local authorities may agree to rezone the parcel. The process of modifying the zoning or obtaining a variance can be quite lengthy and costly.
Residential facility requirements
The building code is another key consideration when converting a commercial space into a residential one. Office spaces, old industrial facilities and vacant warehouses likely do not have the infrastructure necessary for multiple independent residential units.
It may be necessary to completely rewire and reform the building. Independent heating and cooling systems are also frequently necessary. The cost of renovating a commercial facility to make it compliant with current residential building codes.
The cost of converting a building can eat into the profit margins for investors and owners. However, an awareness of regulations and compliance with the law can make it easier for investors to estimate costs and create a realistic schedule for renovations to the facilities. Investors intending to expand or substantially alter their real estate portfolios often need help.
Reviewing development plans and zoning issues can help investors and property owners avoid common pitfalls. Plans to convert underutilized space into high-demand residential properties can prove lucrative with the right approach.