I'm not really too familiar with development so sorry if this kind of sounds simplistic and dumb. But have you guys ever seen someone acquiring single family homes in a supply constrained market immediately after a rezoning decision has been made? E.g. part of Queens/Brooklyn gets rezoned for multifamily and you start buying every single family listing in the neighborhood with all cash offers about 10 minutes after the decision has been made.
I'm guessing residential realtors aren't smart enough or hard working enough to get the information as quickly as I can. However, I can see better connected developers moving on this before the information even becomes public.
What are your thoughts? Any developers around here?
I guess that is theoretically possible, but rezoning efforts in urban markets are typically highly publicized affairs with major political undertones and public approval processes. Sometimes developers get lucky and can take advantage of an unsophisticated owner but it's rare on a larger scale. That may happen if a one-off owner isn't aware of the actual FAR potential of their property. If you are talking about a highly sophisticated and high barrier to entry market like Brooklyn, chances are the investors are either themselves not idiots, or have advisors to help them not be idiots and get caught up in that exact type of situation. When you have that much value tied up in a real asset the owners tend to know what they're doing. Sounds like you are expecting to deal with some herbalife-subscribing, Nigerian prince befriending amateurs which seems unlikely.
Oh, I've seen some real bush league shit out in Queens.
But seriously, I wouldn't call the $10 million market all that sophisticated. I've met some really dumb people with $5 million buildings. But I was referring more to a 1-2 family house in Queens with a small backyard. Something that was purchased decades ago by a working class family and is sitting on the market as a single family home. A rezoning decision gets made and 10 minutes later, you make an all cash offer at their asking price. I'd be shocked if your average residential realtor gets information that quickly.
I would imagine local neighborhood community groups are highly involved in any zoning changes. As such, they would notify the neighborhood of the change as it is coming, most likely indicating potential for higher home values.
In this case, I would wager that a property owner in Queens NYC is not some backwoods dullard who is unware of what a zoning change means for their property. I suppose its possible to find a few deals, but I wouldn't call it a robust investment strategy
That does make sense....
I still think this has potential in more tertiary markets with suppy problems. E.g. Long Island. I know no one likes the suburbs anymore but the shortage of rental housing out there is unreal. Plus, the East Side Access and Hudson Yards projects are going to be game changers in my opinion. Way more people working within 0.5 miles of a Manhattan LIRR station. Combine that conveinence with the fact that NYC prices have gotten insane and I see a promising growth story for Long Island multifamily.
A rezoning decision doesn't usually fly under the radar, especially in a place such as Long Island where home prices are very high and there is a strong NIMBY mentality.
True but there is a lot of really dumb money out there. Like as in people living under a fucking rock. And yes, that is my opinion of residential realtors. Like how did that profession not die when the internet became a thing?
You're gonna "show me" a house. That's seriously the skillset you've decided to acquire in life. Most of them don't even work fulltime. They're full time moms who like to work a couple days per week to feel important.
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