3 things to consider when converting a commercial property to residential
Though it can be a challenge, the rewards from a Commercial to Residential conversion can be great.
For instance, converting a Victorian family home that has been used as a commercial property for many years, into beautiful modern apartments isn’t always straightforward. There are several different factors to keep in mind and it’s important that you have a detailed plan in place for completing your project.
Here are three of the main aspects to be aware of:-
Watch out for additional costs
Under new permitted development rights, offices usually do not require planning permission to be converted to residential property. However, work associated with the actual conversion can sometimes hold your project up.
Before committing to the purchase of a commercial property, assess all of your funding options and the level of work that will be involved. It may also be worthwhile to seek advice from a certified property accountant that specialises in the property market and how that side of things work.
Calculating the cost of your conversion can be tricky, there is a lot to take in to account. It’s vital that you completely understand what your project needs and that you comply with the necessary regulations. Many issues that arise in a Commercial to Residential conversion come from not taking into account unexpected problems, such as discovering a problem with the structure.
Location, location, location
Start with the end in mind and remember who you are going to be marketing your conversion to. If you’re planning to create a family home, are the local town centre and other amenities easily accessible? Can the new owners park their car outside? Will there be a garden or space for children to play in?
Buyers often want convenience, so the distance to the nearest shops will always be a major factor in their decision. Consider the immediate area around your property – is the closest shop in walking distance? Where is the nearest bus stop?
The site of your property is also worth remembering. If it is situated in or close to an industrial estate, pollution and noise can severely affect your project’s value and who is likely to purchase it. There may also be limitations on extensions and other external work, however your local authority can advise you on what you need to do to remain compliant.
Know your market
Having a strong insight into the current market trends is vital for ensuring that your project yields the return that you want it to. Having a minimum of two but preferably three different exit strategies is very important before you start the project! Will you sell the property once it’s completed or will you hold it as a rental property for on-going monthly income and longer-term capital growth? In both cases, pitching the right price is just as important as the conversion itself.
Knowing your market also allows you to approach specialist lenders for funding. However, if you can’t show how you will repay their loan, lenders will simply walk away. They want to know `how much, how long and when does the money come back, with their interest`! They will also need to understand the numbers to see that it’s a viable project and that you’ve covered all the bases and all things stack. Do your research and put a plan in place well before you purchase a property to convert.
Need help getting started?
Developing properties into vibrant and stunning properties is at the forefront of what we do here at Earl & Pelham. We love finding new sites with plenty of possibilities and can help you tap into that potential.