Typically, commercial properties offer great cash flow streams when being rented out. It can be the best way to boost its value and maximize the revenue it generates as a significant investment. This approach has something to do with turning commercial properties into residential ones. Unfortunately, there are many considerations to make to ensure the success of this real estate undertaking.
Thus, if you’re planning to convert commercial premises into a residential property, below are the four tips to keep in mind from the get-go:
- Find The Right Property
While developing a commercial building into a residential property for rental purposes can be an attractive real estate investment, it’s still important that you find the right property for this huge real estate project. As an investor, you should make sure the property you’re looking for has the potential to undergo residential developments.
For example, you should consider some usual attributes such as being in a great location and having access to a variety of amenities, including public transport, arterial roads, cafés, and schools. If you need help in finding the perfect location for your project, you can work with a commercial real estate agent who can aid you in your own research and give you some property options that will suit your requirements.
- Understand Zoning Laws
Another essential tip when converting a commercial property into a residential one is to check and understand zoning laws. This is to make sure that the building you choose doesn’t have planning or zoning issues, such as whether the premises can be demolished or re-developed to another type of property.
In order to do this, you should call the local council to help you know and understand the do’s and don’ts about its change of use. Also, try to inspect the local area so you’ll know what developments will likely become beneficial to the property.
Once you’ve done your research, then it’s time to apply for the rezoning to get started with the conversion process. In doing do, you may be required to process all the paperwork provided by the local planning department.
- Work Out A Budget
Typically, a conversion project can be costly and it can range from hundreds to thousands of dollars, depending on your location. That said, it’s best if you work out a budget to determine how much you can afford when you decide to turn a commercial building into a residential one. Also, you should be aware that this type of real estate undertaking comes with unexpected additional costs, so you should get ready with your finances.
In addition to the purchase costs, you should also think about the surveyor costs, taxes, and even the re-development expenses. This means preparing a huge amount to ensure the success of this project. However, if you have insufficient sources of funds, looking into different financing options can be a perfect idea. These can include self-build mortgages and bridging loans, which refer to a short-term financing option you can use when you lack funds to finance the purchase of a new property while giving you time to sell your first property.
But if you want to get the right financing for your real estate conversion plan, be sure to contact your lender to know the best option available to you.
- Renovate The Property And Make It A Home
Once you figure out the financing options you can use for your conversion project, the next thing is to conduct the renovations and transform the property into a home. Since one of the end goals of the transformation is to rent out the premises, be sure to pay attention to the different types of home renovations, including the aesthetics and functionality aspects of the property.
To make this process smoother, the following are some renovation tips to keep in mind:
- Take advantage of the existing features – Many commercial buildings come with unique design features that you can take advantage of when converting it into a residential property. For example, you can retain brick walls or high ceilings as these can become an attraction on your property.
- Don’t rush the renovation – While you may want tenants to move in as soon as possible, it’s important not to rush the renovations to avoid making wrong and costly decisions. Take your time by thinking about what you should do with the premises to make it a home.
- Invest in natural light – Think about adding natural light to the property as most tenants will more likely appreciate homes with windows and easy access to outdoor spaces.
Typically, turning a commercial building into a residential one can be possible as long as you plan and prepare for this project. Thus, if you want to have a highly profitable real estate investment, follow the tips mentioned above and you’ll be on the right path towards attaining a better financial future.