Does anyone BUILD multifamily??

[Beth Tischler]

I found an area that has good schools, low crime rate, convenient amenities nearby but no multifamily properties in the area.....like, at all.  Is this a business opportunity? Other than getting permission from the village to build them, are there any flags that come to mind with this idea?

[Sue Hough]

@Beth Tischler. Beth, this is from my recent Blog post on Bigger Pockets and I think you will find if helpful…

1. Zoning Classifications. Land parcels are plotted on zoning maps which are created and managed by local municipalities (city, county, or state) which oversee the construction of development projects. The purpose of these maps is to ensure the municipality’s growth and building development are in alignment with the needs and vision of the community. For example, an area zoned for schools is usually not placed adjacent to an industrial zone. Zoning classifications will help you determine the type of building project that is allowed according to your parcel’s designation.

These are the most common zoning classifications:

• Single Family Residential
• Multi-Family Residential
• Commercial
• Light Industrial
• Industrial
• Agricultural
• School/Church

Be aware that zoning classifications are not uniform between municipalities, therefore it is critical to contact the zoning office for every parcel you want to develop. Among the details you want to make sure you obtain (usually available on the website of the local building and zoning department): size and use of buildings, minimum and maximum lot sizes, building coverage (permeable surface), setbacks, density limitations, parking requirements, and allowable business among other details.

Obtain a zoning map to ensure your project parcel does not sit directly adjacent to a zoning district classification which could adversely affect your project.

Should the current zoning conflict with your intended project, a call to the local Department of Building and Zoning can help you determine if a zoning classification change is possible. Unfortunately, zoning changes are often lengthy processes.

PRO TIP: To protect your cash flow and vision for what you want to develop, make sure your attorney structures your deal to make the purchase contingent upon proper zoning and issuance of permits. This is a common approach that shouldn’t cause any issues.

1. Soil Suitability. Before a problem takes root, make sure to start any land development project with a thorough understanding of the soil composition of the parcel of land you want to build on. Understanding the state of your soil will enable you to construct with the right materials in the right location, providing long-term value and benefit.

To determine if you have strong soil, suitable for building, most local municipalities require the use of a soil engineer. The results of their many tests are usually required to some degree before getting a building permit as well as a certificate defining the source of clean drinking water (potable).

Start with a Percolation Test (aka PERC Test) if you need a septic system. You want to make sure that the soil on your land can properly support a septic system. This means determining if the field is sufficiently permeable to absorb liquid flowing into it. You don’t want waste or sewage seeping back up and pooling on the surface. A soil engineer will use a much deeper hole, often 7 to 10 feet or deeper, as they look for a high-water table and the presence of rock ledges or impermeable soil that could block water absorption. Keep in mind that a failed perc test means you may not be afforded the right to build. Make sure your purchase is contingent on passing this test.

Once your parcel is deemed suitable to support a septic/waste system, the soil engineer can proceed by preparing a topographical survey (known in the biz as a “topo”) to determine the natural flow of water and the potential risk of pollution. The building department is especially concerned with this test as it will provide valuable information regarding the possibility of water run off to neighbors. Should your new development pose negative water distribution issues a solution can usually be achieved with newly placed retaining walls, drainage swales and a variety of other natural and human-made structures. Keep in mind, the solution will add unexpected expenses to your project.

A contaminant test may be required, especially if you are in an area which is know for various toxins. The soil engineer can also verify that there are no toxins or contaminants (like lead, arsenic, or cadmium) in the ground. The local Department of Health and Environmental Control can usually provide guidance relative to which contaminants, if any, are prevalent in your project area.

Ultimately, once safety is accounted for, a good soil composition test will help you determine if you will be able to properly support the weight of the buildings being planned. Unsuitable land areas are usually pretty obvious: swamps, bogs, or parcels that are near nuclear power plants or chemical retention ponds. A good building site has soil that doesn’t shift, expand or shrink drastically. Typically, this tends to be a mix of gravel and sand, which offers great stability and handles the presence of water very well. These tests are important pieces of information that will impact how you build your foundation.

PRO TIP: Here’s a do-it-yourself soil test that can give you an early indication of your soil's suitability for building before you do any professional testing. Simply take a ball of damp soil in your hands from your proposed parcel and see how it crumbles. Soil heavy with clay will most likely retain its shape in your hand, indicating high water concentration which is bad for foundations due to its tendency to shift around as it dries or moistens. If there is too much sand the soil will have trouble retaining its shape, foreshadowing the kinds of problems your foundation is likely to face. Soil that crumbles in bigger chunks tends to indicate the right mix of materials.