Zoning is the body of law that encompasses the rights and privileges granted by a local jurisdiction for the legally allowed use of the property. Many problem s can be created and many problems can be solved with zoning.
As a former zoning administrator for 12 years in two different jurisdictions near Atlanta, Georgia, I’ve seen the benefits and the damages zoning laws can produce. As a believer in reduced government control, I view zoning as a “necessary evil.” As a landlord, you will probably come around to this view as well.
As an investor, I prefer to purchase property that has strong zoning regulations for several reasons:
1. Strict zoning laws help maintain property values. I personally have purchased properties in a jurisdiction that is known for strong code enforcement; specifically, Alpharetta, Georgia, a suburb of Atlanta. As a conscientious landlord, your worst enemy will be those landlords who allow the neighborhood to run down. If the grass gets too tall, or the neighborhood is scattered with broken windows, or junked cars scatter the road, a good code enforcement officer will help remedy the problem. Of course, some of your property will be in neighborhoods with a homeowner’s association (HOA). While they can affect the same outcome as a code enforcement officer, their process is much slower and cumbersome. A code enforcement officer can normally see a problem, knock on the door, and the problem is resolved in a few days.
HOA’s have to write letters and beg and plead to have problems corrected. And, depending upon state law, many HOA’s can only lien the property for failure to comply with a neighborhood rule. The HOA is usually not even allowed to actually correct the problem. A code enforcement officer can; in many cases, take the person to a local court, similar to a magistrates court and require a clean up. Some jurisdictions have the right to hire contractors to do the clean up and then the property is liened by the jurisdiction for payment. Other remedies include hefty daily fines until the problem is fixed.
An effective code enforcement officer is like having your own maintenance man running around with a gun and badge requiring your tenants to keep the place clean. That’s a valuable service that I take advantage of anytime I can. One particular code enforcement officer that I know has been a huge asset to me as a landlord. He keeps an eye on the neighborhood and keeps it cleaned up. An occasional phone call from him about a maintenance issue will also get me off my duff and calling the tenant to get the problem corrected. Befriend your local code enforcement guy and he will be a valuable asset for you in your constant battle against maintenance problems.
2. Another reason for strong zoning laws is they tend to regulate the supply and demand market cycles. A community with strong zoning laws usually has a lot of obstacles for developers to overcome in order to start a development. As a developer, I obviously haven’t liked this part of government control. But, as an investor of existing units, it helps to protect the status quo. That government control decreases your competition by increasing what we call “barriers to entry.” The jurisdiction will require numerous public meetings, require ad nauseum permitting meetings, and will generally put the developer through a-hair-pulling-out process after process before he can build more units. It is this slow process that makes it hard to develop in most communities, and this slow process will be to your advantage as an owner of existing rental units.