I live in Arlington, VA, which is going through some zoning changes. We own a single-family house that, until very recently, was zoned for single-family only. Recently, the “Missing Middle” proposal was passed, which (if I understand it right) eliminates single family zoning in Arlington, and allows multi-family houses (up to 4-8 units, I think, depending on plot size) to be built, with a slow phase in of just a handful of redevelopments per year. I think this alone makes our property worth more – one can make more money charging rent on 4 or 6 apartments than on a single-family house (for example).
Further, I live along the “Plan Langston Blvd” corridor, which appears to include my street in a zone which could be upzoned far beyond just a multi-family house or small apartment, but up to apartments 12-15 stories high. According to the plan, no one will be forced out (except possibly those on properties that will have new streets going through their land) – and the proposed new streets leave my property alone. The plan uses the following language “Redevelopment of single-home parcels along edges will only occur if, and when, property owners decide to sell”, and my property is along one of these “edges”.
One of my neighbors has already gotten an offer, from an investor hoping to sell to larger developers later once the plan is formalized. Another neighbor who knows an “insider” in the county government says that in the next 3 years or so this plan is likely to be formalized. I will be happy to sell at a certain value (significantly above current value), and I want to maximize the amount I get. How do I achieve this? Do I collude with my neighbors? Do I wait until everyone else has sold? Something else?
Moderating:
As this post seeks mostly opinions, we’ve moved it to IMHO.
I’ll add that there’s a block of about 8 houses that appear in the county plan may be a single “zone” that could be redeveloped for a large apartment building. Of those 8 houses, we’re pretty close to 3 of our neighbors, and maybe could become friends with a 4th. They may be willing to work with us altogether to maximize the offers we could get. If so, how do we do that?
Congratulations on your windfall. Certainly talk to your neighbors to find out what they’re doing. One of the things you’ll have to do is compare cashing in early to cashing in late based on your ability to reap a greater return from investing the short term gain elsewhere.
No windfall yet! There are still plenty of things that could go wrong - chiefly, that the county plan doesn’t go forward as it appears now.
My thoughts on when to “cash in” tend to be that we should wait - firstly until the plan is finalized and certain, and then until the developers are itching to go forward rather than trying to get in early. We like the neighborhood as is and have no need to move anytime soon, so there’s no other urgency. But I know of I wait too long we could lose leverage, especially if everyone around us sells.
Tricky question. The way to maximize your personal return is probably to be a holdout when a developer is amassing parcels around you. You could get a premium so they can complete their parcel. But, you don’t want to be this guy. Plus, you may be waiting a long time for a developer to come and make an offer.
Perhaps the better thing to do once the rezoning is set is to team up with your neighbors and get them all to agree to sell simultaneously to a developer at some premium. You effectively do the developer’s work of assembling the parcel and they figure out what monstrosity they want to build there. Of course, that requires herding cats.
You could quietly buy options on your neighbors’ properties to assemble the parcels the developers might want and try to internalize some of the developer’s gains from assembling the parcel. But if your neighbors start talking to each other, you’re in the same position as the developers, fronting cash that might take years to generate a return, negotiating with holdouts, and responding to constantly shifting political, financial, and real estate market circumstances. And options are risky because they are time limited. If you don’t get a developer to buy within the exercise period, you’ve lost everything you paid.
You could buy your neighbors’ properties naturally as they come to market for regular prices but that puts a lot of financial eggs in one basket. In the meantime, you fill the houses with renters, possibly losing cash flow and changing the character of the neighborhood altogether until you can finally tear it down and let a developer build their dream.
Whatever you do, good luck.
Thanks. I like the second option, though I don’t think we’ll be able to get all the neighbors on the same page. But maybe most of them – if the parcel is 8 lots, as it appears on the current plan, then I’m just about certain we could get 4 (including us), likely one more, and the other three would be tossups.
If you and your neighbors price it too high, then the developer will just move and develop somewhere else. It’s a balancing act.