Definition of Commercial vs Residential.

[ThomasAJ]

Is a property that is located in a business zoning but can be used for residential/office purposes considered strictly commercial?

I ask because there are a number of buildings in Sth. Melb. that are located in bus. zone but have only a small area on the ground floor set up as office.

ie 3 stories: grnd is office + car park thru rear lane, other 2 floors can be bus or resi.

My ultimate reason for asking is that banks may look at the loan as resi rather than CIP so maybe lend say 85% more easily.

 

[Rolf Latham]

most lenders valuers will mark that as commercial

You might be able to get ith through resi with a lender that doesnt need a val

ta
rolf

 

[Aaron_C]

It depends. If the property is allowed to be used for resi and it looks like residential, then the banks may treat it as a residential security. But ultimately the valuer has to make the judgment call on that and he is what the banks will rely on.

 

[merc69]

Is there a IP you are looking at with a Lease in place?

 

[Bird Dog]

most lenders valuers will mark that as commercial

You might be able to get ith through resi with a lender that doesn't need a val

ta
rolf

Hey Rolf,
wouldn't it say pretty clearly on the title that it's zoned "mixed use" etc which would ring enough bells for the lender to run further checks and eventually find out it's commercial?

B.D

 

[RightValue]

Unless instructed otherwise, if the property is zoned business it is valued/considered as a commercial property.

This year I valued a property that was on land zoned business - it had a former milk bar to the front which was closed and a shell and it was a predominately residential property in a residential suburb. The bank instructed me to value iit as a residential property (which it essentially was). I also had to value as a house what was clearly a shopfront on an arterial road with a one bedroom living accommodation at the rear because it was zoned residential. Usually when I turn up to a property and I see it is in a commercial zone I just get paid full fee for turning up and the valuation gets cancelled.

An exception is apartments, especially CBD as this is a permitted use and the titled property is a residential apartment.

However what you described may get valued as residential as residential is obviously a permitted use (with permit) and the predominant use of the building is residential. It would be bloody hard to value it a sa commercial property.

If you do make an offer on such a property make it subject to finance as it does not neatly fit into the little category box and some lenders will just decline it for that reason.

 

[RightValue]

Hey Rolf,
wouldn't it say pretty clearly on the title that it's zoned "mixed use" etc which would ring enough bells for the lender to run further checks and eventually find out it's commercial?

B.D

The title does not have any zoning details.

A title is just that, title to a property. The zoning of a property can change.

A section 32 on the other hand if part of the contract should have the planning certificate which will give the correct zoning.

Then there is also the sticky issue of existing use rights.

 

[ThomasAJ]

Is there a IP you are looking at with a Lease in place?

There is no particular property for sale at the moment.

My son in law rented one out at 177D Dorcas St. Sth Melb which seems to be zoned as B3Z. It's on the corner of Dorcas and Moray sts.

See http://planningschemes.dpcd.vic.gov.au/portphillip/maps/portphillip03zn.pdf

B3Z definition is here
http://planningschemes.dpcd.vic.gov.au/aavpp/34_03.pdf

He ran a business from there with a small showroom on the ground floor but the 2 floors above were used strictly for resi. Though the prior tenants used them for business as far as he could tell. (had comms cabling throughout).

Looking at B3Z definition it seems accommodation is prohibited...BUT...I am far from knowledgeable in this area.

Actually what sort of person/company should I contact that would explain the details of zonings/overlays etc?

 

[Aaron_C]

A townplanner would know all about it - but the best (Free) advice you can get is to talk to the local council. They'll let you know what you can/can't do and what you need a permit for.

 

[Bird Dog]

The title does not have any zoning details.

A title is just that, title to a property. The zoning of a property can change.

A section 32 on the other hand if part of the contract should have the planning certificate which will give the correct zoning.

Then there is also the sticky issue of existing use rights.

Ah, yes that's what I mean R.V. Thanks for clarifying.

 

[Dylan33]

I'm going through this at the moment. I was told by the lender ( One of the big four ) If there is a resi lease on it at the moment, and it is classed as mixed resi/commercial zoning. I would be able to get a resi loan and treat it accordingly. However if in the future I decided to put a business tenant in there and use it as a commercial lease I would need to notify the lender who would then have the option of changing my loan to a commercial one.

Good luck.

 

[Dazz]

if in the future I decided to put a business tenant in there and use it as a commercial lease I would need to notify the lender who would then have the option of changing my loan to a commercial one.

Ouch, that would be difficult.

You'd have to gather up all of the normal residential dollars and cents and give it back to the Bank so they could put it back into the normal vault.

Then they'd have to assess whether they wished to be involved with the other funny money.

If approved, someone from the Bank would have to then go down to the other weird vault and get out a wheelbarrow load of the commercial dollars and cents and give it to you.

You might find it difficult, because most Vendors only accept the normal dollars and cents the Banks issue with residential properties. The other weird dollars and cents the Banks issue with commercial property is hard to put in slot machines, and normal sized ATMs can't handle that type of cash.

Yep, changing from a normal loan to a commercial loan sure throws up some difficulties for the Banks. That weird vault is a lot longer way for the Bank guy to push his wheelbarrow. Naturally, the Bank will want to charge you heaps more, cos that extra wheelbarrow and the extra guy to go to the weird vault and pull out the different money is very expensive and time consuming.