We are pleased to say that we have already received a question for our experts. Thank you.
“What would be an added value to a vacant view lot, in San Francisco w/o building a residence on it?”-dhze
As answered by Eddie O’Sullivan of Hill & Co. Real Estate www.buysellmySFHome.com:
The best way to add value to any lot in San Francisco, view or no view is to start the process of getting entitlements from the city.
This means getting planning permission from the city. This process can take 6 to 12 months and cost any where from $10,000 to $25,000 depending on who you use and what problems arise as the process moves forward.
This adds tremendous value because it saves a developer time and money. If everything is in place and ready to go, a developer that is 1031 Exchanging from another project will be happy to pay a premium for the lot as they can begin work straight away. I believe that for every one dollar you spend getting entitlements; you will get a minimum of a $5 return.
You do not have to worry about the floor plans you choose because a developer can request permit changes to the floor plans without much difficulty. Once the structure is approved by the city you can make changes to the interior quite easily so your goal is to maximize the structures square footage. Hopefully this answers your question. Good Luck!
Eddie O’
Editors note: Eddie is Irish, full on, so read that again with an Irish accent to get the real flavor.
_______________
“What would be an added value to a vacant view lot, in San Francisco w/o building a residence on it?”-dhze
As answered by Shanendoah Forbes of Arroyo & Coates email: [email protected]
The most effective way to “Add Value” to a vacant lot is to find out the highest and best use under the current zoning restrictions. Also, it is important to research any zoning or usage changes that might have a valuable impact on future development. If it is zoned residential and there is a relatively small amount of square footage, the most valuable development will likely be a two unit apartment building. The restrictions on how many units per square foot of lot space varies neighborhood to neighborhood, however the larger each unit is the more valuable they will be.
For example, if your square footage allows for the construction of 5 units, it may be more valuable to build two HUGE units that will attract a TIC buyer who is looking to convert to condo. I am not a condo conversion expert but I do believe that any two unit property in San Francisco that is “owner – occupied” for at least one year will automatically qualify for condo conversion. This is a big deal so make sure you check with a San Francisco Attorney on that…
If you have plans drawn by an architect for two luxury units with parking then you will have an extremely valuable vacant lot, especially if you can secure the permits for the work as well.
Here is the logic: A developer will want to see existing plans to either use them or modify them. It will save them time and money. The plans and permits will guarantee that the city has already reviewed, and hopefully approved, the prospective project. A developer will make his money doing what he does best – saving money in construction and development costs and selling the finished product at a premium.
They will also ensure themselves a profitable exit from the project because any high end two unit building in San Francisco will likely be purchased by “owner – user” TIC speculators that want to convert their property to condominium. They will have three things going for them: easy sale, easy financing, plenty of buyers. Thus you have provided the recipe for the most valuable property in terms of apartments. Two units have proven to be much more valuable than your stock, multi-unit apartment building.
Please note: If you are zoned for “Mixed- Use” you must explore the possibility of maximizing your commercial potential this could increase the value even beyond a two unit apartment building.
My only disclaimers are: LOCATION is everything……and if you want to go the extra mile you can hand over plans and permits for the development of “condominiums” if you apply and obtain the proper paperwork before construction begins. Condo development is a different ballgame and I don’t want to open a new can of worms.
Shanendoah”
________________
As answered by me, Alex the Editor:
More details would be great in order to determine highest and best use, but to keep it simple….think about re-zoning, or lot splits.
________________
Added in the final hour from Sven Lavine of Sven Lavine Architecture
“One thing that could be effective in adding value to a vacant lot would be to prepare a study on the potential for the lot. This would involve determining the allowable uses, number of dwellings, maximum buildable area on the site and any requirements (parking etc.). A simple site diagram could demonstrate the buildable footprint, views, access, utilities and any other useful information. Any other conditions or additional process that the applicant might face, like design review boards should be included. You could also include a geotechnical investigation, which would recommend a foundation system and identify any unstable conditions. If such a report demonstrates that conditions are stable, and that a conventional foundation system is applicable, it might alleviate concerns that an educated buyer might have. A preliminary study is a small investment, and can be a very useful selling tool. It gives an uneducated buyer the confidence to take on a vacant lot, and it gives the experienced developer the tools they need to make quick calculations and educated decisions, without being locked in to anything.
The next step could be to prepare plans and even go through the permitting process and obtain a building permit. A simple plan or rendering may help a non-developer visualize potential. Having a building permit could be an added enticement to a buyer, developer or not. But you have to be careful here. One of the enticements of a vacant lot is that the buyer has so much freedom on how to use it. There is a good chance that they may envision something entirely different for the lot. Once you have a building permit, it is hard to make anything other than minor changes to the plans. By obtaining permits for a “safe” option, you may be limiting the perceived potential of the lot.
Good luck,
Sven”
Thanks for writing in. Feel free to discuss further by submitting a comment and telling your friends/family about us.