You found a property for a conversion! Can you get it past zoning??

Now that you have found the perfect property for your potential conversion project, you need to make sure that the city will allow you to make the necessary changes to the property that will allow it to become a self-storage facility. You need to check the current zoning. Will it allow for self-storage? If not, what will it take to change the zoning so that you can build self-storage?

If you are lucky enough to be able to just change the current facility into self-storage, then you can hire your architect to begin designing your dream self-storage facility. But if you are not lucky enough to be in the right zoning then you will need to find out what the process is to get the zoning changed and if the city is even open to it. If the city is against your project from the beginning, it may be very difficult to get your zoning changes approved.

If they are open to your project, then you want to find out how long it will take to go through the process. Will this coincide with your contract? If not, can you get an extension on your contract? Do you need to offer the seller more earnest money to get them to give you more time? If not, what are you going to do? If you close on the property without the right zoning, you may be stuck with a property that you can’t use.

In addition, can you even close on the property without the necessary approvals? Your lenders may be unwilling to move forward without the permits and correct zoning in place. They don’t want to finance a property that you can’t use. Even if you could get them to finance it, you don’t want to pay interest on a loan while you might have to wait for a year to get the necessary approvals, maybe 3 years or more depending on the city.

Many sellers will allow you to extend your closing with non-refundable earnest money if they understand where you are in the process and why you need to extend. Many sellers know that you are doing the work to make their property more valuable. Make sure that your contract is airtight.

Once you know how long the process is expected to take, then you need to find out what the steps are. Who do you need to talk to at the city? What do they want you to do? Ask them who they recommend you work with. If they won’t make a recommendation, look at who has gotten the last few zoning changes approved and talk to that guy. See what he thinks your chances are of getting approved. Make sure that you do all of this during your due diligence time period so that you can back out if there is no way to make the changes that you need to get your self-storage property built.

Conversions are a great way to add to your portfolio. Make sure that you are looking at the right property for your conversion and that you are talking to the right people about any potential changes you might need to make to the property so that you can see your dream come to life. As always, happy investing.