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Home » Property Management » How to Convert Residential Property to Commercial Property?

Have you found the perfect property to turn into a commercial space, but the only problem is that it isn’t a commercial property? Can a residential property be converted to commercial? Don’t worry – you may be able to file for rezoning. Below, we’ve broken down the steps on how to convert residential property to commercial property.

Is it legal to convert residential to commercial property?

Yes, you can turn a property that’s currently being used for residential purposes into one that’ll be used for commercial purposes. Do note, however, that you can’t convert your property’s use whenever you want. In short, you can’t simply decide to turn your property into a commercial space today, and be able to run a business from it by tomorrow. You will have to go through a legal process to be able to consider it a commercial property.

How to Convert Residential Property to Commercial Property?

So, how to convert residential property to commercial property? Every city will have its own rules regarding property conversion, so it’s best to consult a real estate professional such as a commercial real estate property management service provider to be sure you abide by them. In general, however, here’s what you will need to do:

#1 Research rezoning rules and regulations

Research rezoning rules and regulations

Zoning is a concept used by city planners to control how a piece of property can be used in a specific zone. For example, it’s common for the city council to ban commercial properties in neighborhoods, as commercial activities can cause a disturbance. However, if a property owner wants to use their property in a way that goes against how it’s zoned, they can file for rezoning.

The problem with rezoning is that it’s not always good news for the people who are already living there. For instance, turning a two-bedroom home into a business’ base of operations can increase traffic, plus it can cause neighbors to feel uncomfortable. This is why city planners and councils tend to have strict restrictions on how properties can be used and converted.

To be able to rezone your property, you’ll need to be familiar with your city’s zoning rules and regulations. You can consult your local city council or go to the city planning office, where you may be asked to complete the paperwork.

#2 Consider what the community may think

The city planning office will be concerned about the change’s impact on the community. That’s why they will inform the public about your proposal. The community will have the chance to raise their concerns to the local city council, while you, on the other hand, will have to win them over.

You’ll be able to explain why you want to convert your property into a commercial space, but don’t expect everyone to be on your side. Remember, the council’s decision can impact people’s lives, so they may not be pleased about it. To help your case, you can try to show the community how the change can benefit them. A residential property management company may be able to help you showcase properties with a similar situation as yours.

#3 Participate in city council meetings

Participate in city council meetings

It can be incredibly beneficial to participate in city council or city planning office meetings. Not only will you be able to get the “inside scoop” on planned developments that may impact your property, but you’ll also be able to get to know who the important players are. City council meetings are also a way to find out if there are any plans to build any roads, subways, etc. in the area – these may or may not be beneficial to your property.

#4 Wait for the city council’s decision

Once you’ve filed your papers, the city planning office will determine if it’s possible to turn your property into a commercial space. At this point, all you can do is wait for the city council to come up with a decision. Keep in mind that it will probably take a lot of time, as turning a residential property into a commercial property tends to be an undesirable idea to the public, particularly if they’re concerned about peace.

It’s worth mentioning that the city council won’t always respond with a “yes” or “no”. If they don’t find your proposal convincing, they can ask you to add more details or change it.

#5 Consider working with an attorney

Filing for rezoning isn’t always a straightforward task, so it helps to partner with a real estate lawyer who specializes in rezoning. Lawyers are more familiar with local laws on changing a property’s purpose (particularly residential to commercial). They can also collect data to help your case, meaning they can increase the chances of your proposal getting the green light.

Things to consider when converting residential property to commercial property

Sometimes, it may be better to buy a commercial property that’s already in a commercial area. Here are a couple of considerations when changing your property’s use:

#1 Is it worth it?

Is it worth it?

Before you even file for rezoning, it would be wise to have your building inspected. Bear in mind that many buildings have problems that make them not worth the time and money to be rezoned. You may have to renovate your commercial space, and this can cause you to spend more than you anticipated.

#2 Is it in a prime location?

Commercial properties can be profitable – as long as they’re in a great location. With that said, if you aren’t sure about your property’s profitability, it’s best to consult a commercial property management firm. They’ll be able to determine if your property is in an ideal location for commercial activities. Ideally, your property should be in a location where there will be consistent foot traffic, as well as a wide pool of commercial tenants.

If your property management firm deems that your property isn’t in a prime location, think twice about rezoning, and consider buying a commercial property that’s already in a commercial zone.

#3 Is it up to code?

One of the main things to consider when converting a residential property into commercial property is whether or not it’s up to code. The local city council will also consider this, so it pays to have your property inspected to make sure it meets requirements on fire, safety, etc. Besides, it’s your legal obligation to keep your tenants safe, so you might as well deal with it as soon as possible.

Remember to hire a commercial property management company

If the local city council gives you the green light to convert your property into a commercial space, great! Now, all you’ve got to do is to partner with a commercial property management company to ensure that all of the effort to rezone it won’t go to waste. At Luxury Property Care, we’ve been providing expert commercial property management services to South Florida cities for years. Plus, we’re here to help you identify profitable properties and guide you through the rezoning process if needed. For more information, call (561) 944 – 2992 or complete our contact form.

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