How Zoning Affects Your Real Estate Investment Bottom Line

Real EstateMost jurisdictions in the United States have some form of zoning in place. As a real estate investor, you need to know the basics of zoning, because it affects so much of what you do.

So, What Is Zoning?

The Colorado Department of Local Affairs considers zoning as “the most common tool used to prescribe the allowable development on parcels of land.” It’s dividing an area into zones and districts, with a unique set of standards for land use and development for each one. The land uses may be residential, commercial, or industrial.

For example, if a land is located within a Neighborhood Commercial zone district, it allows both residential and commercial uses, with single-family residential being the primary use. The zoning code, however, sets certain limitations for any commercial development to preserve the community’s existing use.

Why should you, a real estate investor, care about this bureaucratic mumbo jumbo? Because it affects your bottom line.

At a minimum, you need a guarantee that the property you’re investing in is legal. Your real estate attorney in Denver helps you ensure that. As your legal guidance, they see to it that no details contained within the agreements will come back to haunt you.

Make an Effort to Check

If you’re looking to develop or build a property, know what the zoning ordinance allows. Zoning can be complicated. Go out of your way to check for yourself; get expert legal advice. Don’t simply trust the seller or the realtor.

Once you buy the property, it won’t matter who did what in the past. The problem is now all yours to fix. Worst-case scenario: they’ll make you tear down a building or remove the addition if it doesn’t adhere to the ordinance.

Also, the local government can easily change the zoning with little notice, so stay tuned. You may notice an update in the codes every 10 years or so. Zoning is also political, meaning it can change depending on what politicians decide you can do with your property. Observe this process carefully and protect your interests.