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It is important for your real estate professional to know the answers to these basic questions.  Buyers, investors, and developers ask these general questions when analyzing and shopping for properties.  As a seller, you need to decide if you really want to sell and that the real estate professional you solicit, discusses with you the best way to get the most money out of your property sale.

1.    Have you ever converted an apartment building into condos?
The real estate market is changing.  Thoroughly understanding all of the options available to the property owner is vital to a successful transaction.  Investors and potential buyers analyze properties to see how they can get the most value from the building.  One option is to perform a condo conversion of the apartment building and sell the units individually.  There are only a handful of companies in Honolulu that have successfully converted apartment buildings to condos and we are one of them.  We have developed and converted over 100 projects in the past 25 years.
 

2.    If my building burns down, can I rebuild?
At first glance, the immediate answer would be yes, you can rebuild.  But, there are other questions that need to be asked like:  What is the underlying zoning?  What is the size of the lot?  Will you be able to rebuild using the same footprint as before?  How much interior square footage will be allowed?  And so on.  If you or the person advising you does NOT know these answers, you could be at risk of not being able to rebuild your building the same as it was before.  And you may not be able to use it for the same use.  Knowing the right answers and solutions to these questions can save you thousands or perhaps, millions of dollars. 
 

3.    Based on my zoning, what is the maximum interior square footage I can have?
This varies for each zone as outlined by the City and County of Honolulu.  For example, in Apartment Zoned areas, the interior square footage will vary based on what type of Apartment Zone (A-1, A-2, AMX-1, etc.), the lot size, and the Floor Area Ratio (FAR) specific to that zone.
 

4.    What would the sales price be, if I wanted a 5% cap rate?
The basic formula for calculating the sales price of the investment property if you want a Cap Rate of 5% is Net Operating Income (NOI) divided by the Cap Rate.  For example, if you had a NOI of $125,000 and wanted a Cap Rate of 5%, the estimated value of that property is $2,500,000.  The cap rate is one way for investors to compare different properties and see if that project is viable for them.
 

5.    If I convert the building to individual condo units, can I keep 51% of the units?
This goes back to understanding the basics of condo conversions and can be answered quite simply by knowing the Hawaii Revised Statute 514B.
 

6.    What are the setbacks for my building?
Zoning codes and rules are determined by the City and County of Honolulu.  Many of the older buildings on Oahu are allowed setbacks of 5 ft. on the sides and back of the property and 10 ft. on the front.  If you are building a new apartment building, it is now 10 feet on all sides.
 

7.    Is my building legal non-conforming or legal non-conforming use?
This depends on when and where your building was built.  Both of these terms are commonly referred to as “grandfathered.”  A structure is classified as legal non-conforming if, at the time it was built, it met all building codes, but does not conform to the current building codes.  A structure is classified as legal non-conforming use if the building is in an area that has a different underlying zoning.  For example a business located in a residential zoned area.

Confused?  Don’t worry.  The Abe Lee Team makes the process simple.  Whether you are interested in buying, selling, investing, or developing your property call us for a FREE, NO OBLIGATION consultation.  We provide our clients the opportunity to increase their knowledge in topics such as:  wills and trusts; zoning; planning and permitting; etc.

Call us at:

·       Call direct:  808-228-4916

·       Email:  Team@HawaiiRealEstateReport.com