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WHAT WAS IT?
Put on your detective hat and start interviewing. Try to identify and interview past owners and occupants of the property to identify historic property uses. Even interviewing adjacent property owners and business operators can be a good source of information. Historical information about the interior upgrades and/or renovations can provide you with an opportunity to uncover untapped hidden value. If a restaurant and/or bar occupied the property, there may be hidden value to salvage. For example, if a bar once operated on the property, it might prove useful in pursuing a liquor license that could be grandfathered in.
WHAT CAN IT BE?
First, learn about any potential constraints by examining the certificate of occupancy and the
title report. These can reveal if there is any use or other restrictions on the property. Then ask yourself, where do you believe the property’s finances and value will be in five years? Consider different factors, including the potential to significantly increase the rent roll and decrease the operating expenses, or to increase the amount of rentable square feet. In most circumstances, the largest increase in value can be achieved when the existing zoning permits more density or additional construction on the property. Or, if a municipality makes a change to allow more density on a site, they effectively give the owner a winning “concrete lotto ticket.”
Nowadays, we want success right away with the least effort possible. But before making any real estate investment decision, make sure to answer the three critical questions that allow you understand how and why a property can substantially increase in value — or not.
Sam Liebman is founder and Chief Executive Officer of WealthWay Equity Group LLC, a New York-based private equity and real estate development company. He has owned substantial interests in over 70 properties during the past 30 years, ranging from multifamily communities, office buildings and shopping centers, to the ground up construction of a luxury 21-story condominium development in Manhattan. His new book is Harvard Can’t Teach What You Learn from the Streets: The Street Success Guide to Building Wealth through Multi-Family Real Estate (Made for Success Publishing, Jan. 11, 2022). Learn more at samliebman.com.
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76 FEBRUARY 2022 - APARTMENT MANAGEMENT MAGAZINE AMM2