By Joe Arias
Real estate is one of the very few investment vehicles where you can force appreciation of your asset. Additionally, there are a variety of ways to force appreciation in real estate which makes this investment class the most flexible to leverage for investors. One way to increase real estate property value is through a change in land use.
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Land use refers to the assigned zoning of a piece of land for a particular type of real estate. There are several types of land use that are typically used to classify a piece of land. The most commonly familiar type of land use is residential and commercial. Additional land use types include recreational, transport, and agricultural. Land use is subject to change with proper approval by the municipality that the land falls under. The most common laws associated with changing land-use types are zoning laws. Zoning laws involve the regulation of the use and development of the real estate.
The purpose of zoning is to divide a municipality into residential, commercial, and industrial. Zoning regulations may include the specific requirements as to the type of buildings allowed, location of utility lines, restrictions on accessory buildings, building setbacks from the streets along with other boundaries, size and height of buildings, and several rooms. Now that you are familiar with the basics of land use type and zoning, it is time to understand how to increase real estate property value through a change of land use.
Plottage
Plottage refers to the increase in value realized by combining adjacent parcels of land into one larger parcel. The process of combining the parcels is known as assemblage. What occurs often is the value of the whole parcel will be greater than the sum of the individual parcels. This is a great strategy when you have the opportunity to purchase the surrounding parcels of land.
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Conversion
This strategy refers to taking an existing building or land and converting the asset for another use. An example of this is taking an old commercial warehouse and converting it into a 100 unit residential apartment complex. Oftentimes, the best approach is finding underperforming commercial assets in growing markets and renovating it for better use that will provide long term cash flow and appreciation.
Zoning
Great for expanding population markets. This method requires taking zoned land such as agriculture and having it changed to residential or commercial. Think about the land that is in the path of progress. Do you live near a town or city that is expanding outwards towards agricultural land? You can spot the progress years in advance and buy up the land and change the land use for that land which ultimately will help boost its value as land becomes more scarce with the growth of expansion by the city.
Real estate has many angles that you can play. Changing the land use of land that you purchase is a fantastic strategy for those interested in taking advantage of appreciation. There are endless opportunities in several growing markets.
Joe Arias
Joe Arias and his partners have flipped hundreds of properties in the Southern California Region. He has developed cutting-edge systems to simplify and scale the entire remodel process that can easily be applied to flipping, rentals, wholesaling, and other passive income strategies. More recently, Joe founded a real estate investing education company called RealSuccess Investments, allowing him to share his tools and systems with hundreds of up-and-coming investors.
RealSuccess is focused on education on flipping, rentals, passive income, and wholesaling.
Joe is also a best-selling author. He has written 4 books: Finding your RealSuccess, First Steps to Flipping, R stands for Rentals and Retirement, and Wholesaling Real Estate.
“I came from Argentina when I was 20, I am 40 years old now. I didn’t know anyone, I am CERO generation, usually people say, I am first or second generation but I was the one that crossed the border, no language, no friends, no family, no money, nothing, nada… If I can do it, anyone can.”
From a young latino immigrant to a celebrated real estate investor, Joe is a true testament to hard work and discipline. As an investor, he has made it his mission to help others achieve financial freedom while enjoying living a life of passion, fulfillment, and empowerment.
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