Don't say it! Don't! Variance....
The short answer is a simple no. Walk away.
If you still think you can make the ROI work with a variance please read on.
I do everything to stay away from a variance. The municipalities requirements for an approved variance are cumbersome. They are set up to discourage the public from trying to get one. Here is the definition from Wikipedia, “A variance is a deviation from the set of rules a municipality applies to land use and land development,” The municipality likes to keep areas organized even though this might lead to boring homogeneous McMansion track home neighborhoods and strip malls which I will happily talk about in another post.
There are really only two reason to try for a variance.
- It is your home and you are going live there. It is personal and the ROI is not an issue.
- It is a big real estate project where it may take 3 to 5 to 10 years to build which will benefit the community when all said and done. We are also talking about insance amount of profit. At my office there is a project that started ten years ago and is still in the permitting process. If all goes to plan they might complete the project by 2030.
A variance will not work with the ROI for flippers or small multi-family projects. Here is a list of some items that should discourage anyone from trying to get a variance.
- Cost. A variance application usually cost between $5k to $20k to apply! This does not guarantee an approval. The application may still be rejected!!!
- Time. The municipality will require multiple agencies to review the variance application. If all the agencies approve the variance it usually still has to go in front of a review board. In any of these reviews the variance may be denied which in turn burns more time to adjust drawings to resubmit. A conservative estimate is about 6-12 months for a variance to be approved or denied. Do you have that amount of time? I don't.
- The variance has to either show a benefit to the community or hardship on the owner’s behalf. A 200 SF addition crossing the setback line to a home does not add anything to the community. Adding value to the property is not hardship. A hardship could be when a home is destroyed in a natural disaster and the owners want to rebuild in kind even though it would now be non-conforming per zoning codes.
- Variances only allow for zoning or planning codes to be modified. It has nothing to do with building codes.
I hopefully scared everyone from looking at properties that need a variance for the project to move forward. The ROI will most likely not work if a variance is required. Be patient and keep looking.
There are other avenues to explore such as special exceptions, special use permits and code modifications that might scare many investors/developers. However, these three do not have as much effect on the ROI as a variance and are easier to obtain.
I will go into these three topics in my next blog post. Just think of this as a cliffhanger. Don't worry you will not have to wait over a year like Game of Thrones.
What did I miss? What did I get wrong? Did I get anything right? It's a blog, there is always more to say. More minds are better than one.