Vacant Land Analysis of a non-conforming 4-Unit

[ZZGAMAZZ]

The subject is legal non-confoming improved as a 4-unit residential income producing property on a parcel currently zoned light industrial, just about the only property within a mile in either direction with anything other than big commercial/industrial improvements, on a 1-acre parcel in a suburban city where residential parcels are max 15,000 sf. I'm conducting a direct market analysis of vacant land to determine the value of the site as vacant in the CA. I'M CONFUSED about whether to base my Opinion on residential lots [which reflects the current use, or industrial lots that reflect HJBU.... but if I apply the result to obtain the adjustment factor in the SCA, the per-unit difference could reveal a land/total value ratio of like 95%, and change the OV in the SCA from, say, $1.2M to [estimated] $6M - $8M.

Probably should conduct HBU first although current use presumably would NOT be revealed...and for better or worse I'm not losing the job because just way too many creditors waiting to get paid...

 

[TerryRohrer]

Well, start with the fact that the market for vacant tracts is not the market for improved tracts. Guessing the value of the subject site as if vacant, and comparing that to a similarly guessed value of the site under an improved sale as if vacant, and making an adjustment equal to the difference, is theoretical garbage based on assumptions necessary to facilitate storytelling without data or analysis. If you need to know the impact of value on a multi-family property on industrial land surrounded by industrial land, you need to find sales similarly afflicted. Or, if your lucky, you client likes fiction, in which case, others will chime in on the process for ideation, plot development, character development, etc. I was never adept at fiction and creative writing, so have nothing to offer in that realm.

 

[ZZGAMAZZ]

Well, start with the fact that the market for vacant tracts is not the market for improved tracts. Guessing the value of the subject site as if vacant, and comparing that to a similarly guessed value of the site under an improved sale as if vacant, and making an adjustment equal to the difference, is theoretical garbage based on assumptions necessary to facilitate storytelling without data or analysis. If you need to know the impact of value on a multi-family property on industrial land surrounded by industrial land, you need to find sales similarly afflicted. Or, if your lucky, you client likes fiction, in which case, others will chime in on the process for ideation, plot development, character development, etc. I was never adept at fiction and creative writing, so have nothing to offer in that realm.

The only true model match to the subject, which I included as a comp in the SCA, went until contract and sold...abou 39 months ago; and, like the subbject, it was "so non-conforming" that when I drove it for the comp photo, those 4-units have been replaced by a commercial building. That IMO is stranger than fiction but very interesting and also supportive of the fact that the subject at present is not HBU...

 

[TerryRohrer]

The only true model match to the subject, which I included as a comp in the SCA, went until contract and sold...abou 39 months ago; and, like the subbject, it was "so non-conforming" that when I drove it for the comp photo, those 4-units have been replaced by a commercial building. That IMO is stranger than fiction but very interesting and also supportive of the fact that the subject at present is not HBU...

So, that one example suggests that HBU is redevelopment. Comparables might be vacant land, or tracts purchased for redevelopment.

 

[Terrel L. Shields]

Land is valued as if vacant and available for its highest and best use. When the as is property is not at its HBU then an obsolescence exists between the value as vacant and value as improved.

 

[George Hatch]

What zoning jurisdiction? Because residential *development* is not permissible on light industrial zoned parcels in most jurisdictions in this region. But, there are a few exceptions.

In any form of land value analysis the comps for this parcel are most likely limited to other parcels with the same or related zoning. Even if residential is allowed, the most similar comps will still have the same zoning.

 

[ZZGAMAZZ]

What zoning jurisdiction? Because residential *development* is not permissible on light industrial zoned parcels in most jurisdictions in this region. But, there are a few exceptions.

In any form of land value analysis the comps for this parcel are most likely limited to other parcels with the same or related zoning. Even if residential is allowed, the most similar comps will still have the same zoning.

YEEP. The table of perissible M-1 light industrial uses in incorporated Fontana does not include any resideential uses. The subject is one of perhaps a handful [max] of residential improvements along a 2-mile stretch of Valley Blvd from Sierra to Cherry; and its 1-acre parcel is perfectly compatible with the street, although abnormal for residential uses.

 

[DWiley]

The subject is legal non-confoming improved as a 4-unit residential income producing property on a parcel currently zoned light industrial, just about the only property within a mile in either direction with anything other than big commercial/industrial improvements, on a 1-acre parcel in a suburban city where residential parcels are max 15,000 sf. I'm conducting a direct market analysis of vacant land to determine the value of the site as vacant in the CA. I'M CONFUSED about whether to base my Opinion on residential lots [which reflects the current use, or industrial lots that reflect HJBU.... but if I apply the result to obtain the adjustment factor in the SCA, the per-unit difference could reveal a land/total value ratio of like 95%, and change the OV in the SCA from, say, $1.2M to [estimated] $6M - $8M.

Probably should conduct HBU first although current use presumably would NOT be revealed...and for better or worse I'm not losing the job because just way too many creditors waiting to get paid...

Wait, what?

Do I have this right, you are saying that based on pure residential use, the value would be $1.2 mil, but if you adjust for the commercial site value the value jumps by over $5 mil???
So, what you are saying is that the site value alone exceeds the "residential use value" by 4X to 6X ??

If I do have that correct, then it seems you are just proving that the HBU is not as a 4 unit residential. And, MV must be based on the HBU.

I do not know CA law on this, but does your credential allow you to appraise a commercial/industrial site with a value of $5 mil or more?

I owned a firm for over 20 years, and I know the pressure of having bills to pay, but I would not bet my state credentials on an assignment like this.

You can not get the market value by calculating the residential value and then just making an adjustment for the commercial value of the land. Doing it that way is just asking for someone to file a formal complaint.

 

[Sadie]

Land value is the land value. Doesn't matter what the improvements are. What is the zoning and what can you do with it. The only thing that might be weird is if there is a deed restriction regarding allowable improvements. You can value the 4 plex, but what DWiley said about HBU. But it will be tricky. Your client may not want you to proceed.

 

[glenn walker]

YEEP. The table of perissible M-1 light industrial uses in incorporated Fontana does not include any resideential uses. The subject is one of perhaps a handful [max] of residential improvements along a 2-mile stretch of Valley Blvd from Sierra to Cherry; and its 1-acre parcel is perfectly compatible with the street, although abnormal for residential uses.

I know this area and street very much and Valley Blvd in this area is almost all mixed use located on light Commercial and Industrial land. Most 1 Acre or small parcels are used for used car lots, motels, shops, small units but finally with set backs and ADA parking you may end up with about a half acre usable. You can't use warehouse land as comparables some are 5 to 10 acres with new buildings.

Also some plat maps on Valley Blvd were measured to the center line of the street and are often 30 to 40 feet shorter in length than the gross to the C/L as that was County not City of Fontana when assessors maps were original and we never depend on them must get a survey. In summary your making a lot of hypotheticals with no support. BUT $5 Million as vacant lot ? Run don't walk your in way over your head.