Can Residential Property be Used as a Commercial Property?

Can Residential Property be Used as a Commercial Property?

When investing in property, you may be wondering if a residential property can be used for business purposes like a commercial property. While it is possible, there are several things to take into consideration before converting residential property for commercial use. Let’s break down some of the steps and things to keep in mind when using residential property as a commercial property.

Legally Using a Residential Property as Commercial Property

When it comes to zoning and classifying property, there are distinctions made for residential and commercial zones. For instance, in a residential zone with houses and apartments, retail properties are not always allowed. There are also certain commercial activities that are zoned to not be near places of worship like churches or temples.

To use a residential property as commercial property, you will need special legal permission to convert to a mixed-use property, which can be difficult to obtain. You will need to go through local authorities, which will be dependent on what you wish to perform, as there will be concerns regarding how the neighborhood and the environment will be affected.

Pros of a Mixed-Use Property

When converting to a mixed-use property, there are certain advantages to leasing space for a business. This includes:

  • A long term lease
  • Extra security for the residential portion
  • No late operation

However, there will also be disadvantages to this, including the increased difficulty of evicting tenants, difficulty financing, and more.

Difficulty Using Residential Property as Commercial Property

Mixed-use properties are quite common in areas like New York City, where space is limited. Municipalities in other areas, however, may prohibit mixed-use property or make permits harder to obtain because of a desire to keep residential and commercial zones separate.

Something important to also consider is changing your building and contents insurance. The current insurance policy for your residential property may prohibit commercial use and therefore invalidate your policy. If you are converting your own home for business purposes, you will also need to check with your mortgage lender, as they may restrict this altogether.

If you intend to make changes to the property, such as another building or even a storage shed, you will need to obtain legal permission, which can take months before approval. Something even as simple as increased traffic to your business will require planning permission, as other residents in the neighborhood may become upset.

Don’t Want This Hassle? Invest in Commercial Property!

The best way to avoid this legal back and forth converting your property is simply by investing in commercial property. Commercial real estate is a trustworthy investment that will maintain its worth and generate profit. If you’re ready to consider investing in commercial real estate, look no further than Bartow McDonald. For the best commercial real estate opportunities, contact Bartow McDonald today!

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