Updated October 15, 2020: 

Learning how to convert residential property to commercial varies by location, as all zoning laws are regulated on the local level. It is important to check with your municipality before you start the process to prevent any last-minute errors from arising. Regardless, converting a residential property to a commercial one is beneficial for anyone wishing to start a business from home.

Zoning ordinances control how a property is used, and thereby how it is classified by the government. They similarly aim to protect existing developments from unwanted change that could impact businesses and communities alike.

Types of Property

There are five traditional types of property:

  • Commercial.
  • Residential.
  • Recreational.
  • Industrial.
  • Agricultural.

Rezoning residential property may be challenging, as it impacts the community as a whole, often increasing traffic and reducing privacy. Variance requests are more common than rezoning requests. Rather than change how the land is zoned, variance allows for an exception to the original zoning classification. Variance tends to be a simpler process.

Even so, if the property is still primarily a residence, nether a zoning change nor a variance is required. With this, there are often strict restrictions on the percentage of the property allowed to be used for business purposes. Restrictions placed on the amount of customers seen is also common in these cases.

If the desired business would not thrive with the above restrictions, the property will need to be rezoned. In this case, permission will need to be granted by the appropriate zoning board.

How To Get Residential Property Zoned Commercial

  1. Research local zoning laws - Look for zoning maps online and compare zoning trends. Switching a property from residential to commercial requires requesting a change of zone. This can only be done once it is proved that the switch would benefit the entire community. The main zoning categories are:
    • Agricultural.
    • Commercial.
    • Industrial.
    • Residential.
    • Mixed use.
  2. Meet the neighbors - Meet with any neighborhood associations in place to discuss the planned commercial development. Before anything is finalized, both government and community approval is required.
  3. Attend zoning meetings - Attend meetings to create relationships with important players involved in the process.
  4. Collect official land description details.
  5. Have a back-up plan.
  6. Make the zoning request.
  7. File necessary paper work.
  8. Announcement to the community.
  9. Comments from the C\community.
  10. Government revisions - Any required changes are requested and reviewed.
  11. Final vote - This is when the final zoning decision is made.

Top Five Considerations: Commercial to Residential Conversion

With the demand for an increase in housing, the government determined that the best way to ensure the demand was met was to use pre-existing space that was no longer being utilized.

Similarly, learning how to convert commercial property to residential may allow home buyers to save money when looking to purchase a new home. With the recent decline in the economy, there is a large amount of vacant commercial properties, thereby decreasing the demand. Due to this, buyers are able to invest in a commercial property, convert it to residential, and save money overall.

  1. Additional costs - Renovations are often associated with unexpected costs. Labor costs in particular are often more costly than anticipated.
  2. Access points - Commercial properties are often located in busy, high-traffic areas, which could mean they are less accessible for families and daily living. Shared entrances are also common in these properties.
  3. External work - While it is possible to renovate the inside of the building, there may be laws that prohibit renovating the outside of the property. Often, if external renovations are desired, permission will be required.
  4. Surrounding area - As these properties are often located in central areas, there could be issues with excess noise from nearby establishments as well as poor access to schools for families with children.
  5. The waiting game - Waiting for available space may take longer than anticipated. As converting commercial property to residential is a big change, many areas have policies requiring sufficient proof that the commercial property is undesirable before it can be converted. Some areas require the property to be listed for up to 12 months before it can be purchased for residential conversion.

If you need help converting a 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, Menlo Ventures, and Airbnb.