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A Real Estate Investor's Guide to Rezoning Property

Here’s what investors need to know about the rezoning process.

[Updated: Feb 04, 2021] Dec 03, 2020 by Tara Mastroeni
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As a real estate investor, you'll experience times when local zoning ordinances get in the way of your investing strategy. However, while it's not always easy, rezoning is a way to get around those laws. With that in mind, here is your guide to rezoning property. Read it over to get a better idea of how this process works and so you'll know where to turn with your zoning questions.

What are zoning and rezoning?

Too often, zoning regulations and information get buried in legalese, which makes this topic feel much more complicated than it actually ends up being. In a real estate context, zoning refers to the particular rules under which a property is allowed to be used and developed in a specific geographic area. Most often, these laws and ordinances are determined on a local level.

For example, there's a reason cities tend to have fully developed commercial areas bordering on residential suburbs. Typically, these areas do not mix their respective uses and are protected by local zoning laws. After all, you wouldn't want to live next to an industrial factory, now would you?

However, the term "rezoning" refers to the process of changing existing zoning laws. When you rezone an area or specific property, you're essentially seeking to change the way that the property can be used or developed. Notably, any proposed change to a local zoning designation must be approved, which can be a lengthy process. Remember, zoning laws are in place to promote the good of the entire community rather than the interests of one particular group or individual.

Why does zoning matter to real estate investors?

Typically, the most common instances of rezoning occur when a property owner wants to change an existing ordinance to allow a residential structure to become a mixed-use or fully commercial building. However, alternatively, a developer may also want to develop a new structure that doesn't fit the current zoning classification for the area in which it would ideally be located.

Let's say you buy an apartment building in a primarily residential area. However, in order to increase your revenues, you have a goal of turning the ground floor into commercial space that you can rent out to a local business. In that case, the property would have to be classified as a mixed-use building. Otherwise, you'll have to try to rezone it.

That said, there is an easier route you can take, especially if you're only trying to change the zoning on one building. This is known as a zoning variance. Obtaining a variance involves getting a one-time exception to the local zoning laws for the particular property rather than changing the laws themselves. However, if you are more of a developer than an individual investor and you need an exception for multiple structures, rezoning is likely going to be your best bet.

A step-by-step guide to rezoning property

If, based on the above information, you think rezoning is the best option for you, keep reading. Below is a step-by-step guide to rezoning property. It's important to note that since zoning laws are decided on a local level, the process can be different for everyone. However, the steps below will give you a general idea of what to expect.

Take an inventory of any recent changes

Truthfully, simply wanting a zoning change is not enough to make it happen. Often, you have to be able to justify your reasoning behind why you want to change the zoning law. To that end, one of the best ways to do so is to identify any changing conditions in your area that may warrant a zoning request.

For example, has a new road caused problems for your business income? Does recent job growth or population growth warrant the development of new housing?

Contact the local zoning board

Once you've taken some time to build your case, you'll need to contact the local zoning board. When you do so, it's important to ask them about their specific requirements for the rezoning process. In some cases, the zoning board may also ask you to attend a pre-application meeting to get your questions answered.

Keep in mind that the members of the zoning board and zoning commission often have a lot of say in whether or not to approve your rezoning request, so you’ll want to make sure that you remain as polite and as cordial as possible.

Formally apply with a rezoning request

Often, the first step to making changes to your local zoning map is to fill out an application. This form will likely ask questions regarding what type of proposed change you would like to make and your reasoning behind why the current zoning regulations are not sufficient. Usually, the application will also have a fee attached.

Undergo an analysis

Typically, once your completed application has been received, the next step is for your local planning staff to conduct an analysis of the property. It's important that you're part of this process as the property owner. You're going to want to meet with the planning staff at the location and show them exactly what you want to do.

Then, if they have any questions or concerns, you’ll want to do your best to handle those accordingly. Additionally, if they ask you for any particular documents, make sure to get them in as soon as possible.

Attend a planning commission meeting

After the planning commission has completed its analysis, generally the next step is attending an official planning commission meeting. This meeting is most likely going to be a public zoning hearing.

During the hearing, you'll be given a chance to make your case and to answer any questions that the commissioners or attendees have about your rezoning application. You should do your best to answer these questions, and, once it's over, the planning board will give a recommendation on your rezoning petition.

Attend a legislative body meeting

The last step is to go in front of the legislative body in your county or municipality, which is likely going to be the zoning board. At this point, there will be another public hearing where you will be asked to make your case for the change to the zoning ordinance. After you do so, there will be a final vote.

If the vote goes your way, a comprehensive plan amendment will be drawn up for the zoning regulation, at which point you will be able to get started making the changes to your property. However, if the vote does not go your way, you may have to wait for a set period of time before you can apply again.

The bottom line

Truthfully, changing zoning regulations is rarely easy, and as an applicant, you're going to be expected to jump through a lot of hoops. However, if you think a zoning change will have a substantial impact on your revenues, it may be worth all the hard work. To that end, use this as your guide to the rezoning process. While you're going to have to do your own research to find out the particulars for your county or municipality, this should be enough information to help you get started on the right track.

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