Highest and best use question (SFR on R3 Zoning)

[J Grant]

Yes it's tiny lot haha
I already replied above but I think the lot is too small to build for a duplex or more as described below.

What can I build in the R-3 zone?

• A single-family residence.
• Two units (attached or detached) if the lot size is at 2904 square feet and the land use category allows at least two units.
• Multiple dwelling units (attached or detached) with a maximum density established by the land use category and 30 dwelling units per net acre.
• When calculating density for more than one dwelling unit, always round down for fractions.
• For more than one dwelling unit, units can only be for rental, not for sale unless a land division is approved and recorded.

You CAN build any of those things, but all of them would be miniature scale on a 2300 sf lot, which makes it financially not feasible -

It is cheaper to keep the 900 sf dwelling and expand it if one wants later or cut it up into two units and rent them out. Which leaves the current use the HBU

 

[Terrel L. Shields]

What is the HBU "as improved"? Or, put another way, if the lot were empty would it bring more than it is "as is". Or, does the current dwelling add value to the lot as if the lot were vacant? If so, then it is at its HBU.

The ideal improvement might be a multifamily. The lot might be worth more than a SFR lot. Then the spread between the lot value and the total value of the property might be different and that spread is one way to measure a functional obsolescence of the dwelling.

The property is worth one price. Say a 2000 SF on an R-4 lot. The lot is worth $100,000. The total value of the property as is is $400,000. A SFR lot is worth only $50,000. But the property is still worth $400,000. The $50,000 difference is a functional obsolescence that applies to the improvements.

 

[gorillakimchi]

You CAN build any of those things, but all of them would be miniature scale on a 2300 sf lot, which makes it financially not feasible -

It is cheaper to keep the 900 sf dwelling and expand it if one wants later or cut it up into two units and rent them out. Which leaves the current use the HBU

Well noted sir!

 

[gorillakimchi]

What is the HBU "as improved"? Or, put another way, if the lot were empty would it bring more than it is "as is". Or, does the current dwelling add value to the lot as if the lot were vacant? If so, then it is at its HBU.

The ideal improvement might be a multifamily. The lot might be worth more than a SFR lot. Then the spread between the lot value and the total value of the property might be different and that spread is one way to measure a functional obsolescence of the dwelling.

The property is worth one price. Say a 2000 SF on an R-4 lot. The lot is worth $100,000. The total value of the property as is is $400,000. A SFR lot is worth only $50,000. But the property is still worth $400,000. The $50,000 difference is a functional obsolescence that applies to the improvements.

Thanks for your explanation

 

[Dublin ohio]

Lot size : 2300 Sf

• A single-family residence.
• Two units (attached or detached) if the lot size is at 2904 square feet and the land use category allows at least two units.
• Multiple dwelling units (attached or detached) with a maximum density established by the land use category and 30 dwelling units per net acre.

No matter how you slice and dice it. HBU is as is.

 

[J Grant]

Well noted sir!

I am female (Grant is a former last name) Thanks ! ( I wish I could change screen name toavoid confusion but they dont' allow it, no problem!

 

[George Hatch]

The only relevant question in this analysis is whether the typical buyer would buy the property for it's land value or it's SFR value. Which one is worth more in the market? That's wherein the MV will occur.

Is the property worth more as land? Then value is as land including using land sales for comps
Is the property worth more as the existing SFR? Then value it as an SFR using other SFRs as comps

The complication about looking at the land value is that you have to understand what that land is actually good for. In the case of multi-family land, that's most consistently valued on a price/unit basis: How many units can you get on the lot, including the requisite parking. With a small lot, you might not be able to max out the density after consideration of setback requirements. If this parcel is some narrow 25x100 footprint and there are 5ft side setbacks, 20ft in front and 15ft in the rear then the building pad will look something like 15x65 inclusive of the onsite garage. Trying to get 2 units into this footprint might be unfeasible regardless of the maximum density under the zoning.

If you've got an existing unit onsite then I can just about guarantee that the property of this size/zoning is worth more in the existing use than as land value for a new build. Unless it's located in the beach zone and its a beater unit.

 

[Terrel L. Shields]

I wish I could change screen name

actually I think you can...

 

[sputnam]

What is the HBU "as improved"? Or, put another way, if the lot were empty would it bring more than it is "as is". Or, does the current dwelling add value to the lot as if the lot were vacant? If so, then it is at its HBU.

Exactly

 

[gorillakimchi]

The only relevant question in this analysis is whether the typical buyer would buy the property for it's land value or it's SFR value. Which one is worth more in the market? That's wherein the MV will occur.

Is the property worth more as land? Then value is as land including using land sales for comps
Is the property worth more as the existing SFR? Then value it as an SFR using other SFRs as comps

The complication about looking at the land value is that you have to understand what that land is actually good for. In the case of multi-family land, that's most consistently valued on a price/unit basis: How many units can you get on the lot, including the requisite parking. With a small lot, you might not be able to max out the density after consideration of setback requirements. If this parcel is some narrow 25x100 footprint and there are 5ft side setbacks, 20ft in front and 15ft in the rear then the building pad will look something like 15x65 inclusive of the onsite garage. Trying to get 2 units into this footprint might be unfeasible regardless of the maximum density under the zoning.

If you've got an existing unit onsite then I can just about guarantee that the property of this size/zoning is worth more in the existing use than as land value for a new build. Unless it's located in the beach zone and its a beater unit.

Nice to see you again Mr. Hatch
I was thinking about set backs, front etc but honestly, didn't know how to calc.
Thanks for your explanation with that clear calculation. Have a great weekend