Rezoning, Subdivisions, and Development, Oh My!

It’s been hard to find regular rehab projects in the past few weeks. Surprisingly, I’ve been receiving opportunities for new development projects throughout the Bay Area.

The margins on those are a lot higher, with 7-8 figure net profits. Unfortunately, they’re also much harder to complete and are riskier if you don’t know what you’re doing.

The complexity of these projects is where the money is made. For example, it makes sense to buy a 2 acre parcel for $2 Million, if it means you can subdivide the lot and build 7 properties on it and sell them each for $1.7 Million. However, if the property is zoned incorrectly, you need to go through the process of rezoning it, which will take a few months and around $10,000 just to apply.

Can you imagine how sad you would be if you purchased the property and spent all of that money on the application, just to get denied by the City? Terrifying.

After you get the property rezoned, you then need to go back to the City to subdivide the property. The City can then approve or deny your plans. They may even limit your subdivision, so instead of building 7 properties, you can now only build 5. There goes $3.4 million in gross revenue!

Finally after all of that, you need to go back to the planning department for them to approve the architectural and structural plans of each home you plan to build on each property.

But if you have the confidence, great relationships with the City officials, and the capital to hold on to the properties, you’re looking a potential goldmine that no one else is looking into.

Most of the investors in our network are individuals who enjoy working on a few projects at a time with low over head. They don’t want a big team, and that makes it impossible for them to tackle big projects like these.

Find ways to add value to society and try to find a niche that no one else is tackling.

What are your thoughts? Are you interested in new development?