External Obsolescence - 2-4 Surrounded By Apartments

[jackimoya]

Are the apartments eyesores or well maintained? Are they so tall or dense built out they create a lot of traffic/noise block sunlight?

The apartments are adequately maintained, varying in number of units. Nothing over 2 story (the subject is 2 story). It's not a higher traffic area, however, the density is pretty high as 95% of the surrounding streets have 2-4, condo or apartment land use.

 

[jackimoya]

Are the apartments eyesores or well maintained? Are they so tall or dense built out they create a lot of traffic/noise block sunlight?

Why would HBU be a SFR and not a 2-4 family?

The apartments are adequately maintained, varying in number of units. Nothing over 2 story (the subject is 2 story). It's not a higher traffic area, however, the density is pretty high as 95% of the surrounding streets have 2-4, condo or apartment land use.

The minimum lot size for R3 (the subject's zoning) is 12,000 sf and the subject's lot is 6,016 sf.

 

[BRCJR]

If the H&BU is SFR (I like SUR=single unit residential) what is the income approach telling you?

 

[J Grant]

The apartments are adequately maintained, varying in number of units. Nothing over 2 story (the subject is 2 story). It's not a higher traffic area, however, the density is pretty high as 95% of the surrounding streets have 2-4, condo or apartment land use.

The minimum lot size for R3 (the subject's zoning) is 12,000 sf and the subject's lot is 6,016 sf.

Then I assume the subject is grandfathered in? ( which could make HBU as is present use but your call). Imo, does not sound like the apts create adverse impact...what is subject rental history re vacancy and rental rate, a few RE agent's feedback if you are unsure.

 

[glenn walker]

NOTE: Jackie your original header says 2-4 units surrounded by apartments ? BUT you stated the Subject is a SFR-Condo-PUD type property. NOT a 2-4 unit apartment building so it appears the forumites are responding based on 2-4 units not a Condo-pud development ?

 

[George Hatch]

The minimum lot size element of zoning relates to the creation of new parcels. Once the site itself "exists" it is usually the maximum density that acts to limit the development potential of the site. I haven't seen it all by any stretch of the imagination, but I don't recall seeing any municipal or county zoning ordinance in Calif that didn't function that way.

In most jurisdictions, an R3 (which is a medium density) zoning reg will have a maximum density somewhere in the 1000sf of lot area per unit range. For the sake of discussion and to make things simple lets assume that is the case here. If so, the maximum buildout for this site might by 6 units, subject to the provision of sufficient onsite parking and other development criteria.

So will as-if-vacant site value for a site that can be built out with 6 units be greater than an as-improved value for the existing residential use? If the subject is an SFR it's very common for such properties to be redeveloped into units, depending on the market conditions in effect for that location. But that's a question to be answered rather than an assumption to make.

If this subject is an SFR the only way you'll be able to figure out whether the SFR use if the as-is HBU is to compare the value as an SFR to the underlying site value. And the only way you're going to be able to do that is to identify and analyze other multi-family zoned site sales, preferably with the same R3 zoning.

The dominant unit of comparison for muilti-family land will be price/unit, particularly when your comps have various zoning designations and varying development potential.

 

[hastalavista]

To add to George's comments....

A substandard lot does not necessarily create a non-conforming use. Many substandard lot sites are considered legal and conforming to the zoning ordinance. It would be unusual for a jurisdiction not to allow a multi-unit zoned property, which has an existing multi-unit improvement, to be developed as a multi-unit improvement if the site were vacant. Even at 2,000sf/unit, a 3-unit property can be built within that requirement.

Jackie-
Your original question was regarding an adverse externality due to your 2-4 being surrounded by 5+ unit improvements. Again, I suggest you analyze the market rents for the subject; if your subject's improvements are consistent with what the market expectations are for those unit-types (there are more factors here, but I think you get the gist) and your subject cannot achieve those market rents, then that may be evidence of external obs. due to the neighboring properties. I doubt that will be the case, but one never knows!

Good luck!

 

[Howard Klahr]

Normally, would consider the subject (SFR, PUD, Condo) being adjacent to apartments as an external obsolescence

Why? If so, what is the substation of this position?

The apartments are adequately maintained, varying in number of units. Nothing over 2 story (the subject is 2 story). It's not a higher traffic area, however, the density is pretty high as 95% of the surrounding streets have 2-4, condo or apartment land use.

If the subject site is "non-conforming" due to insufficent site size, wouldnt the subject reflect the higher density as opposed to the surrounding developments? Is the zoning for the surrounding properties the same as the subject?

Specifically how do the surrounding properties negatively affect the subject?

 

[jackimoya]

NOTE: Jackie your original header says 2-4 units surrounded by apartments ? BUT you stated the Subject is a SFR-Condo-PUD type property. NOT a 2-4 unit apartment building so it appears the forumites are responding based on 2-4 units not a Condo-pud development ?

No, I think you misread my comment. The subject is 3-units

 

[jackimoya]

The minimum lot size element of zoning relates to the creation of new parcels. Once the site itself "exists" it is usually the maximum density that acts to limit the development potential of the site. I haven't seen it all by any stretch of the imagination, but I don't recall seeing any municipal or county zoning ordinance in Calif that didn't function that way.

In most jurisdictions, an R3 (which is a medium density) zoning reg will have a maximum density somewhere in the 1000sf of lot area per unit range. For the sake of discussion and to make things simple lets assume that is the case here. If so, the maximum buildout for this site might by 6 units, subject to the provision of sufficient onsite parking and other development criteria.

So will as-if-vacant site value for a site that can be built out with 6 units be greater than an as-improved value for the existing residential use? If the subject is an SFR it's very common for such properties to be redeveloped into units, depending on the market conditions in effect for that location. But that's a question to be answered rather than an assumption to make.

If this subject is an SFR the only way you'll be able to figure out whether the SFR use if the as-is HBU is to compare the value as an SFR to the underlying site value. And the only way you're going to be able to do that is to identify and analyze other multi-family zoned site sales, preferably with the same R3 zoning.

The dominant unit of comparison for muilti-family land will be price/unit, particularly when your comps have various zoning designations and varying development potential.

I verified with the city that the land use is legal nonconforming because of lot size.