Investment Blog

Know the Zone

Know the Zone

By: Kevin Schill

Recently, I had the opportunity to list a unique property in downtown Boulder.  Putting the facts together to market this property was an interesting and educational experience in municipal use and zoning regulations.  If you're looking to purchase income producing property, you have to know the zoning to know the potential.

Local governments create zoning ordinances and draw up maps that outline the physical boundaries of these zoning districts.  There are several types of districts including high and low density residential, mixed use (combination of business and residential), business, industrial and agricultural.  Within each of the districts you will find definitions for USE, INTENSITY AND FORM.

USE is what is permitted and not permitted in a specific zone.  For instance, you are not allowed to open a retail store front business in a residential zone, although in some zones there are uses that can be conditionally permitted and a variance granted.

INTENSITY refers to the requirements for the allowed development that include maximum residential density, allowed number of units and maximum occupancy.  Say, for instance, you have a 10,000 square foot lot in a high density residential zone that allows for one unit per 3000 square feet, with a maximum allowable occupancy of 3 unrelated people per unit.  You could conceivably build three units with 3 bedrooms each.  Keep in mind this is an over simplification because there are also regulations on FORM that come into play.

FORM refers to the requirements for lot and building dimensions, including bulk(size restrictions), location, and height.  Within these dimensions you have the minimum building setbacks, height restrictions and bulk in any given zone whether its residential or commercial.

Once you grasp these basic zoning concepts for any given investment property it will help you to determine the income potential and therefore the price you would be willing to pay for that particular property.  Keep in mind that it helps to have a knowledgeable real estate professional and contractor or architect guiding you through this process, and it will most likely take a few trips to your local planning department to get the required information to make a sound investment decision.

© Kevin Schill 2018