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In real estate, opportunities often lie beneath the surface, waiting for investors to uncover them. Mike Marshall, an expert in rezoning and entitlements, specializes in helping real estate professionals discover hidden value in properties. By leveraging creative strategies like rezoning and forced appreciation, investors can transform properties into lucrative assets. Let’s explore how these techniques can elevate your real estate ventures and generate motivated seller leads.
Mike Marshall: From Hands-On Real Estate to Zoning Expertise
Mike Marshall’s journey into real estate started at age 12, assisting his father with roofing and other property-related tasks. This early exposure laid the foundation for a lifelong passion for the industry. After college, Mike transitioned into a career in planning and zoning, working 15 years across California and Texas. His roles included managing projects from custom homes to large-scale residential subdivisions and even a movie studio campus.
During this time, Mike identified a critical information gap among local investors regarding hidden value opportunities. To address this, he launched a consulting business that has since evolved into a full-fledged operation helping real estate professionals uncover profitable entitlement opportunities.
What Are Entitlements and Why Do They Matter?
Entitlements refer to the government approvals required to change a property’s use or layout. This process can include rezoning, subdividing, or altering the intended use of a property. Mike Marshall emphasizes that entitlements are the key to unlocking a property's true potential, whether that means converting a single-family lot into multiple parcels or rezoning agricultural land for multifamily development.
Key Types of Entitlements:
- Rezoning: Changing the zoning designation to allow different uses, such as converting residential to commercial.
- Subdividing: Splitting larger lots into smaller, more marketable parcels.
- Changes of Use: Modifying how a property is utilized, such as converting a mini-golf course into a gas station.
By understanding the local jurisdiction’s zoning and density requirements, investors can identify untapped opportunities for value creation.
Forced Appreciation: Taking Control of Property Value
Unlike market-driven appreciation, forced appreciation involves proactive steps to increase a property’s worth. Common strategies include:
- Subdividing Land: Splitting an oversized lot into smaller parcels that can be sold individually.
- Adding Accessory Dwelling Units (ADUs): Increasing density and potential rental income.
- Rezoning for Multifamily Use: Increasing a property’s value by making it suitable for higher-density development.
Mike highlights that forced appreciation isn't limited to physical changes. Investors can also reduce expenses or increase revenue to enhance the value of multifamily properties.
The Rezoning Advantage: High Rewards for High Effort
Rezoning offers one of the highest returns in real estate investment, as it directly impacts a property’s allowed uses and, consequently, its market value. For example, assembling multiple parcels and rezoning them for multifamily development can dramatically increase a property’s worth.
Case Study: A $1.1 Million Value Increase Through Rezoning
Mike shares an example of three agricultural parcels in Florida. After rezoning them for multifamily use, their combined value increased from $1.2 million to $2.3 million without any physical development. This demonstrates the immense potential of rezoning as a profit-driving strategy.
Navigating Government Challenges in Entitlements
Dealing with local government entities can be one of the biggest hurdles in the entitlement process. Investors often encounter delays, confusing regulations, and unresponsive officials. To address this, Mike’s team has introduced a service that leverages their expertise to quickly obtain answers from planning offices, sparing investors the frustration of navigating these systems alone.
While zoning rules vary by jurisdiction, Mike stresses that the underlying concepts are consistent. Understanding these principles makes it easier to identify opportunities and ask the right questions, such as:
- What is the current zoning and its allowed uses?
- Can the property be subdivided or rezoned?
- What density requirements must be met?
Subdividing: A Simple Path to Value Creation
One of the easiest ways to unlock hidden value is by identifying subdivision opportunities. Investors can assess potential subdivisions by reviewing three key factors:
- Minimum Lot Size: Ensuring each subdivided parcel meets zoning requirements.
- Lot Frontage: Verifying that each parcel has adequate road access.
- Density Requirements: Confirming the number of allowable dwelling units per acre.
These straightforward checks can reveal profitable opportunities that many investors overlook.
Timeframes and Costs: What to Expect
The entitlement process varies widely based on location:
- Rural Areas: Rezoning may take just 2–3 months with minimal fees.
- Urban Areas: Timelines can stretch to 18 months, with costs exceeding $40,000.
Mike advises that while rural jurisdictions offer faster processes, urban areas often provide greater profit potential due to higher demand for rezoned properties.
Beyond Subdivisions: Thinking Creatively About Entitlements
Mike recounts an example of an investor flipping a mobile home park deal. By securing entitlements before assigning the contract to a builder, the investor added $500,000 in value. This highlights how entitlements can be applied creatively to various property types for maximum returns.
Coaching Program: Empowering Investors with Knowledge
Mike’s coaching program is tailored for investors, brokers, and agents with some experience in real estate. Participants learn to identify entitlement opportunities and integrate them into their business strategies. The program is ideal for professionals who have existing deal flow and want to add high-margin projects to their portfolio.
Navigating the Entitlement Process
While the rewards of entitlements are significant, the process requires patience and expertise. Each jurisdiction has unique regulations, timeframes, and costs. For instance:
- Rural Areas: Rezoning may take just 2–3 months with minimal fees.
- Urban Markets: The process could span over a year and cost tens of thousands in application fees.
Mike advises working with experienced land use planners and building relationships with local brokers to streamline the process and identify viable opportunities.
Finding the Right Deals
The best entitlement opportunities often come from properties with unique characteristics, such as oversized lots or parcels in high-demand areas. To find these deals, Mike recommends:
- Building Relationships: Partnering with agents, brokers, and engineers who are familiar with local markets.
- Direct Outreach: Contacting landowners or using targeted marketing strategies like direct mail and digital campaigns.
- Understanding Buyer Needs: Engaging with developers early to understand their requirements and ensure the property meets market demands.
Financing Entitlement Projects
Financing land deals can be challenging since many traditional lenders hesitate to fund undeveloped properties. Mike suggests creative solutions such as:
- Private Lenders: Leveraging relationships with private investors.
- Joint Ventures with Sellers: Structuring deals where the seller remains involved until the entitlement process is complete.
These strategies allow investors to tackle larger projects while minimizing upfront costs.
Micro Niches: Finding Diamonds in Real Estate
Entitlements represent one of many profitable micro niches in real estate. Similar to flipping houses or wholesaling, entitlement-based investing requires a unique skill set and strategic approach. Mike compares it to hunting for diamonds: while it demands effort and precision, the rewards are significant.
The Future of Entitlement Investing
Entitlement-based investing is a niche that offers high returns for those willing to navigate its complexities. Whether you’re an experienced investor or a broker looking to expand your portfolio, understanding entitlements can set you apart in the competitive real estate market.
Start Unlocking Real Estate Potential Today
Mike Marshall’s expertise in entitlements and rezoning highlights the untapped potential in real estate. By focusing on hidden value opportunities, investors can achieve significant returns while setting themselves up for long-term success. Whether you’re targeting motivated seller leads or exploring creative property transformations, now is the time to elevate your strategy.
Key Takeaways
- Entitlements Unlock Hidden Value
Entitlements like rezoning, subdivisions, and changes of use allow investors to maximize property potential by altering how land is utilized. - Forced Appreciation is a Game-Changer
By proactively increasing a property’s value—through subdivisions, adding ADUs, or rezoning—investors can achieve significant profits, regardless of market conditions. - Rezoning Offers the Biggest Returns
Transforming a property’s zoning designation can significantly increase its value. For example, rezoning agricultural land for multifamily use can create substantial profit margins. - Know the Rules and Ask the Right Questions
Understanding local zoning codes and asking targeted questions, like minimum lot size and allowable uses, is critical for navigating entitlement opportunities. - Government Challenges Require Expertise
Bureaucratic hurdles can slow the entitlement process. Partnering with experts like Mike Marshall’s team helps investors overcome these obstacles efficiently. - Subdivision Opportunities are Low-Hanging Fruit
Oversized lots often present profitable subdivision opportunities, provided they meet local zoning requirements for lot size, frontage, and density. - Financing Entitlement Projects Requires Creativity
Use private lenders, joint ventures, or seller partnerships to finance entitlement projects, especially when traditional lenders are hesitant to fund undeveloped land. - Coaching and Relationships Matter
Leveraging coaching programs and building relationships with brokers, agents, and engineers can help investors identify and capitalize on lucrative entitlement deals. - Think Beyond Traditional Real Estate Niches
Entitlement investing is a specialized micro niche that requires unique skills but offers extraordinary returns by uncovering opportunities others may miss. - Start Small, Aim Big
While entitlement projects like rezoning and subdivisions can take time, even small efforts can lead to significant profit increases, making them worth exploring.
Ready to Transform Your Real Estate Game? Take the First Step Today!
Ready to take your real estate business to the next level? Discover how you can unlock hidden opportunities and generate motivated seller leads with expert guidance. Start building your portfolio today!
