Real Estate Zoning Does Not Guaranty a Building Permit

[Corey Dutton]

There’s nothing worse than buying an investment property, only to find out that you can’t do what you want with it. Just because a piece of real estate may have a particular type of zoning, this does not mean a real estate investor is guaranteed to be able to do what he or she wants with a property. For real estate investors who have specific plans with regard to a piece of real estate, the zoning itself is only a starting point. Always start with the planning department for the City/County in which the property is located before you purchase real estate for profit to first determine if you can actually do what you want with it.

A good example is an investment property that I purchased for profit many years ago. It was a very large piece of land, located in a gated subdivision. It was a vacant, unimproved property with zoning which allowed the construction of a single family home. The purchase was very rushed and not enough due diligence had been performed on my side. If I had only gone into the County planning department and spent some time, I would have found out that the previous owner had attempted to apply for a building permit and was denied. But because it was a rushed purchase, I only called down to verify the zoning uses, rather than to go in to talk to someone in the planning department about the history of the property. I later found out, after making the purchase fo course, that the County was pushing hard to stem building in the area where the property is located. The investment ended up in a huge legal fight with the County and a lot of anguish on my part. After a ton of money and time spent on unexpected development costs, I finally jumped through the last hoop that the County put in front of me to obtain a building permit. This was after two, long years of jumping through one hoop after the other that the County put in front of me. All of this could have been avoided, had I just spent some time at the planning department before I purchased the investment property.

When purchasing a property for profit, do your due diligence completely, or just don’t buy it! And never assume that a property’s zoning will guarantee that you can do what you want with it, e.g. obtain a building permit. Just because a property has approved, permitted uses, does not mean that you will be able to get building permits for those purposes. Talk to the folks at the City and the County where the property is located and find out the history of the property. Tell them what you plan to do with the property, discuss the process with them, and ask them what potential pitfalls that they may see in your plan.

Posted by Corey Dutton, Private Money Lender