If a home is zoned commercial / residential, is it worth more?

[Melissa M.]

Good Evening Bigger Pockets!!

I have a question regarding a wholesale deal.  I got a phone call on a property that is currently tenant occupied. The owner of course, feels it is worth much more then what I can get on  my comps, but only because it is zoned commercial and residential.  So my question is, how do I figure out what it is worth if we tried to market it as commercial?  I have a feeling that the answer is not going to be a simple one LOL. 

The owner wants to break even on the mortgage, so she owes $120,000 and my comps are telling me its really only worth $160,000 so even with those numbers, I know its not much of a wholesale deal, especially since it needs about $15-$20,000 in repairs to make it pretty again.  So really, I am just curious, when people say to me, but its zone commercial so its worth more, is this true?

Thank you in advance for any help I can get, I love Biggerpockets because there are so many knowledgeable investors on here!!

[Nicholas Novak]

The answer is it depends... if the property is on the corner of two main streets then it's value could potentially huge. If it's on a road where there is a lot of new development going on maybe, depending on if it could be a McDonalds or something.  Heavy commercial depends on the growth in the area. Here in Cleveland I have received a few call over the years where the properties were zoned commercial and I feel like it actually reduces the value. What happens is you reduce your buyer pool so small that it could sit on the market for years, which is probably why they called me. Hope this helps!