Converting Commercial Buildings into Residential Space

by Robert Valenzuela

The economic slowdown has rendered a lot of buildings vacant. If your are like many that run their own small business and are facing current down-sizing, what to do with your commercial space may seem daunting. However, you have a big opportunity in salvaging your situation. With commercial rentals going down the drain and maintenance costs rising, why not change your commercial building status to a residential apartment? There are many looking for more affordable housing. Sound interesting isn't it? This is the opportunity you've been looking for and your chance to make your building into a money making venture instead of a money pit.

The Property Lawyer

For starters, if you have a cooperative building and have a favorable tax status, that's good news. You can reconstruct such buildings to become residential rental spaces without losing your privileged standing. Let your retainer study the provision of Section 216 of the Internal Revenue Code. These are the attorney general's regulations and applicable zoning codes. They require, aside from a property lawyer, that an architect go over a building's certificate of occupancy. Once reviewed, a determination from the zoning board is made on whether or not the certificate of occupancy can be changed to comply with residential real estate requirements. Looking at all the requirements may seem overwhelming, but you may already have all the right documents. If not, your lawyer can assist you in locating the required paperwork for smooth sailing.

The Conversion Lawyer

Aside from your initial property lawyer, you'll have to hire another lawyer whose expertise lies in the cooperative conversion process. He or She will determine if you have enough resources to carry out the changeover. If you don't, you and the other board members by majority vote should agree amongst yourselves to bring in more shareholders to raise the proper funding in order to push through with the project.

The Real Estate Agent

Where does the real estate agent or appraiser come into the picture? Here's the deal. Remember the shares? They have to be allocated properly for the conversion process. And guess who's going to make the calculations? That's right. It's the real estate expert. This is done after the assessment of the size and true value of the rental space become available.

Understanding Section 216

There are many other provisions in section 216 that will help guide you on what appropriate actions you need to know and do. What we have here is just a bird's eye view of the things that you must undertake in order for you to make a profitable investment. The article is not in any way the ultimate guide in taking the proper steps to conversion, but rather an overview of the main obstacles you will encounter when faced with section 216 of the Internal Revenue Code. Please note that every state has its own terms and conditions as well. You will do well, as the article has pointed out already, if you hire and talk to property experts on these matters. The process of conversion may entail some hard work. Nevertheless, a viable financial reward can be made if undertaken with care and prudence.