Value Proposition - Converting a 4 unit building from B1-1 to RM 4.5

[Joseph Tuczak]

Hi Team,

I have been renovating a 4 unit building in South Shore/The Bush. I was able to purchase the property through a commercial loan, as residential financing is not supported by through commercial zoning. This required previous rental property ownership history and a personal balance sheet the bank used to underwrite their risk.

Due to these barriers to entry, I have been exploring a zoning change from B1-1 to RM 4.5 thinking the change will open up the pool of potential buyers with the ease of residential financing. This would in-turn increase the building value.

I have identified total costs and time for this potential change, and was curious what resources or anecdotes you may have to analyze the cost of the zoning change vs the residual outcome and lift in value driven by an increased buyer pool. Worst case, I can look up zoning changes and match the address with recent sales, however, if no permits were pulled I do not know if renovations occurred further increasing the value. Happy to edit the post and share details as needed- thank you!

[Henry Lazerow]

Yes its definitely worth doing. The value of 2-4 unit buildings significantly increases once zoned residential, where can use conventional mortgages. I would even say by somewhere in the range of +20%. I have not seen the issue much though unless its retail that got converted on unit 1, is that the case? 

[Joseph Tuczak]

@Henry Lazerow thank you for the response. 

Confirmed- 3 residential and 1 retail. The retail (corner store) unit was converted to residential over 20 years ago. As such the building was zoned B1-1 due to 1 unit intended for retail use.

It would be great to see a use case for the conversion that allows convectional financing for the zoning change to residential RM-4.5.