Due Diligence in Conversions & New Construction in Self-Storage

There are so many different aspects of a property that you need to verify prior to purchasing that property. However, when you are considering a property site for building or converting to a self-storage facility, the first step is making sure that you can actually build self-storage or convert to self-storage. If not, can you get a zoning waiver that will allow you to build. If you can’t, the property is worthless to you for this project.

Planning and Zoning has typically already zoned all the land into chunks that they think would be the most beneficial for the city. They believe that they have allocated the land into zoning that will provide for the highest and best use of that land. However, there are times when putting a self-storage facility in will benefit the community. If you are able to show the planning and zoning committee that the changes you want to make to a property are in the best interest of the city, then they may be willing to grant you a zoning variance.

One of the first things that you want to look at when you are considering a new property is the current zoning. Find out what types of commercial zoning allow self-storage in your area. Typically, self-storage is allowed in C-1 which is straight commercial & MP which is manufacturing park. Once you know which zoning codes allow self-storage in your area, then it makes it easier to look for lots and potential conversions.

You also want to know your city’s appetite for new self-storage facilities. If they are completely against them, it will make it tricky to get your development approved. If they are open to self-storage, ask them where they would like to see self-storage built. By asking where they would like to see new self-storage you will get ideas on where to start looking and you will have an idea of where the city is willing to approve of new facilities.

Asking for a variance is time consuming but not impossible. You just want to know that you have a chance before you begin investing in expensive tests, research, and professionals. If the city is completely against your project from the start, and you are asking for a variance, you may find it difficult to obtain your variance.

If you decide that you are going to move forward on a conversion or new construction, go through the past filings and find out who has been able to get those approved. He is the guy that you want to work with too. He can tell you if your project has a chance of getting a variance. You don’t want to buy a property that you cannot use so make sure that you give yourself enough time during your due diligence period to get a variance.

If you are working with a bank, they typically will not allow you to close on the property until all of your plans and permits have been approved. If the city hasn’t approved your project, they don’t want to lend to you. They need your funding to switch over to long term financing within 12 months and they don’t want to get stuck with a property that you can’t use either.

Your due diligence period is a great time to research your property for free. You have that time period to make sure that this is really the property that you want. If you structure your offer correctly, then you can walk away from the transaction with your earnest money in hand. If you don’t do your due diligence correctly, you may end up with a property that won’t work for you. Find the right people to help you research. As always, happy investing.