Changing residential property to commercial may be necessary if you wish to operate a business or handle commercial tasks on the property.

Switching from Residential to Commercial Real Estate

Depending on the area in which you live, commercial real estate can be very lucrative. For example, in Dallas and Houston, Texas, the demand for commercial properties is high. However, before switching your property's focus or zoning status to commercial, it's important to understand a few key points to avoid unpleasant surprises.

Working as a Commercial Broker

Commercial real estate differs from residential real estate in a number of ways. The first difference is the focus on business. When a person sells their home, they tend to have emotional ties to the property, which can make it more difficult to complete the transaction. Real estate brokers who like forming personal relationships with their clients and being part of their lives may not enjoy the world of commercial real estate. Although commercial agents do work with people, they focus on the numbers and potential earnings.

Many commercial brokers rely on forming relationships, making connections, and getting to know individuals, especially when they don't have a lot of clients when they start out in their careers. It's important for commercial agents to get involved by:

  • Joining local commercial real estate associations
  • Attending all local meetings
  • Partnering with investors
  • Working with individuals and companies in commercial service fields

These actions can help agents generate more successful leads. Brokers must also invest their time to get to know the commercial aspects of real estate, as well as the local market. This research should involve understanding the types of clients who will be looking to buy and sell commercial properties, how these clients think, and their motivation in making deals.

In commercial real estate, there can be different factors at play, such as complex permit and zoning requirements. Although residential properties have some similarities, commercial properties are more unique and tend to be dissimilar from one another, so brokers must understand the various types.

You should also look into obtaining certification as a commercial real estate broker because the knowledge you gain will increase your credibility to your clients and give them more confidence in your abilities. Working in residential real estate requires quite a bit of patience, and you'll need more of the same when working in the commercial market, where timelines between the first meeting and the closing date are longer. However, the properties tend to be more valuable, so brokers earn higher fees on individual deals.

You may have more time to look for prospects and build your client list, which can help you see better results in the future. Additionally, commercial brokers work with business professionals, rather than individuals who are selling their homes. Therefore, these brokers typically work more traditional business hours instead of having to be available at all hours of the day.

If you're thinking about changing careers from residential real estate to commercial, the process might seem easier than it would be for someone who is just getting into real estate. However, residential real estate is drastically different from commercial, so it's important to understand that you'll have a lot to learn, and you'll need to make changes to your frame of mind and perspective.

Commercial Rezoning

Areas within a specific region that have been zoned as residential typically contain single-family and multi-family residences. Changing the zoning on a residential property can be a challenge because commercial property can increase the traffic or bring more people to the area, infringing on the privacy of the residents. All residents have the right to request rezoning for their residential property.

However, requesting a variance is more common. This option is a permit that allows the property owner to use the land in a way that is different from what was specified in the zoning requirements.

Zoning ordinances vary between municipalities, but most allow property owners to operate businesses on residential property. Restrictions do apply to this allowance. For example, the property's primary purpose must remain as residential use, or the property owner would need to apply for a variance or rezoning. Other restrictions on residential properties include the size and number of signs that can be placed, the number of vehicles used for business purposes, and how many people can park on the property.

If you need help with changing residential property to commercial, you can post your legal need on UpCounsel's marketplace. UpCounsel accepts only the top 5 percent of lawyers to its site. Lawyers on UpCounsel come from law schools such as Harvard Law and Yale Law and average 14 years of legal experience, including work with or on behalf of companies like Google, Stripe, and Twilio.