Do you track local zoning and how do you factor that into you deal analysis?

Question

Listened to @Dave Meyer's great interview with @James Dainard this week and it's got me thinking about zoning. I've always found zoning fascinating. Personally I have thought buying in mixed use zoning could be an interesting opportunity as you can use it for residential or commercial and having that flexibility of commercial property with 5% down if you live in for a while and it seems like a potentially good idea in some areas. But until James' interview I hadn't thought about proposed zoning changes or tracking those as a kind of cheat code to learn more about what areas to invest in.

I'm curious if anyone goes to local zoning meetings? Or maybe you read through minutes of local meetings online?

If you attend these meetings, what do you learn from them? Were you able to take those learnings and put them to use in your investments? Did it change, influence or solidify any of your strategies?

Please share all the details and experiences you've had with zoning meetings / zoning boards / planning commissions! The good, the bad, and the ugly!

Laura Rajavuori · Answer

Hi Rene,

Glad to see some female blood in this world! In my 22 years of investing in real estate my due diligence in zoning has always been to go to the top! RE agents, like minded investors, neighbors, even opinions at zoning committees don’t count. Go straight to the governing city and county, call and get it straight from the horses mouth. I can’t tell you how many times I was told by an uninformed agent that something was legal or zoned for and was wrong. Common sense. This is how I run my current businesses of long term and short term rentals. I decided 22 years ago that listening to uninformed agents was over so I got my brokers license and started what has now grown into a large Real Estate investment company with many agents helping other to find and manage their little to large personal plots. I love what I do and have been so passionate about short term vacation rentals way back in the “mail the keys” and before Airbnb was an item. If you don’t love it, run!! Yes, it’s passive but I like to say it’s passive aggressive! It takes work. Spent all last summer working on my long term props. Now working on my short term properties as I like to do hands on maintenance or designing and financial strategies as much as possible. But I really love the challenge and strive for excellence while creating bonds with people. If you don’t then you’ll get bogged down and want to quit as it is work! Carry on, invest smart, love people, have fun while doing it.

Matt Solis · Answer

You're going to want to leverage house hacking or creative financing to get to 4-6 properties in just 3 years. 160k would be enough for 1, maybe 2 deals the conventional way, and with your current income, it would take you a few years to replenish your war chest for another deal. House hacking is going to allow you to get into your next property for 20-30k on the low end. Creative deals could be for even less. I've been house hacking for 3 years and have acquired 4 properties. Working on getting more creative now as well. I'd say your first move should be to house hack and get out of the apartment, this is the most beginner-friendly way to get started, and as you continue to educate yourself you'll be better equipped to find other deals as you learn.

Ben Trageser · Answer

@Rene Hosman I don’t go to zoning meetings but I try to be as update to date as possible in places that I invest. A lot of zoning and town code around short term rentals has been changing as well as in my area, there are a lot of multi-families in single family zoned lots that are “grandfathered” in. Just do your research on where you are looking and then go from there.

Henry Clark · Answer

Use the lookup for my list in zoning.

Key concepts in zoning are the zoning maps, zoning matrix, planned zoning map, special/use variances.

The mixed use you mentioned can be very judgmental by the city development group.  Plus they can be very dictatorial in all aspects of building.

The harder zoning is though the better your investment will be.  I would rather take 1 year to get all zoning done on a site where no other competitors can come than to be able to build something day one with lots of comparable lots around me.

Each entity is different.  A C2 is not the same as a C2 across the board.  Some agriculture you can do Industrial, but you have to ask.  Just like not all paella are the same.

Mohammed Rahman · Answer

Hey @Rene Hosman

As a NYC broker, I can tell you that zoning knowledge is absolutely crucial for spotting opportunities, especially in urban markets.

Mixed-use zoning has been a goldmine for many of my clients, particularly those who started with owner-occupied properties and later transitioned them to full commercial use.

I've made it a habit to track Department of City Planning updates and zoning proposals because they often signal where the next hot areas will be. For example, recent rezoning in parts of NYC has created fantastic opportunities for investors who were paying attention before the changes hit mainstream news. Build relationships with local architects and expeditors - they're usually the first to know about upcoming zoning changes and can provide valuable insights.

Do you track local zoning and how do you factor that into you deal analysis?

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