Just like any other form of investment, real estate is believed to be increasingly popular due to its potential to produce much higher profit returns. This is especially true if you decide to convert the commercial property to a residential one. Situated in the right area, it can be a lucrative investment strategy as it can potentially provide a consistent additional income stream for investors like you.
Thus, if you’re planning to turn a commercial property into residential, below are the four tips to consider:
1. Find The Right Property
Typically, most commercial to residential property conversions have great profit potential as long as the property is located in a prime location. Thus, before you do the transformation, be sure to find the perfect property for your real estate investment.
In doing so, as a real estate investor, you may consider the following:
Purpose
If you want to lease the property to tenants after the conversion, then you should choose an area with plenty of interested renters. That way, you can get the most out of your rental income in the long run.
Surrounding amenities and establishments
When looking for a property to convert, always check what the surrounding community is like. For example, suppose you’re planning to rent out the property. In that case, it’s said to be useful if it’s surrounded by essential amenities and establishments that can help improve their quality of life.
Thus, if you want to make sure you’re converting the right commercial property for residential use, always think about the considerations above. That way, you can get the best value for your real property investment.
Related: How Do I Get a Copy of The Deed to My Property in Florida?
2. Arrange Your Finances
Property conversions will require a sufficient amount of funds to cover the expected costs. No matter how much you’re dealing with, it’s advisable for you to arrange your finances before starting the whole conversion process.
Fortunately, there are many ways in which you can fund and initiate the process without compromising your finances. For example, if you need money to cover the property refurbishments, then bridging finance can be an excellent option. This type of financing, among others, can provide you with a quick funding solution so you can start the refurbishments without any delays.
3. Change Zoning From Commercial To Residential
Another important thing to do when converting a commercial property for residential use is to change its zoning description. Once you’re done with the research and you find the property fit for your purpose, it’s time to familiarize yourself with the different zoning laws and regulations in your locality to start the rezoning process. The process can include the following steps:
Paperwork
Fill out the necessary paperwork provided by your local planning department. In doing so, make sure to take the payment of fees into account as you may have to spend hundreds to thousands, depending on your area.
Analysis
Once you filed the application, an analysis of your rezoning plan will be done. In case there are disagreements, you may have to adjust your plan to ensure approval.
Commission meeting
Your rezoning petition will be publicized to notify the local citizens about the plan. From there, a commission meeting will be conducted to give the locals an opportunity to raise their concerns and a chance for you to explain your side.
Decision
After the meeting, the commission will make a recommendation which will be forwarded to a legislative body that’ll finally decide on the application. In the event they reject your application, you may have to wait for a certain period of time before you can apply again.
4. Start The Renovations
When converting a commercial property to a residential one, doing the renovations plays an integral role in the process. For example, if the purpose of the conversion is to rent out the property as a landlord, you need to make it functional or livable for them so you can earn more tenants and generate more income.
Thus, to help you with the renovation, you may want to consider the following things:
Preserve the existing features
Most commercial properties have unique design features which you can use to your advantage when renovating. For example, if the property comes with high ceilings, you can use this feature to attract more buyers if you decide to put it on the market for sale.
Make sure the renovation projects are held to high standards
If you’re renting out the converted property to future tenants, then you should ensure that all renovation projects are of high quality. That way, you can guarantee your residents’ health and safety.
The Bottom Line
Indeed, being a real estate investor can be a good way to earn a lot of money. Thus, if you decide to convert a commercial property to a residential one and get more returns, keep these tips in mind and you’ll be in the right direction. Remember, a commercial to residential conversion can be a highly profitable investment if you certainly know the steps to follow from start to finish.
