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Can You Live in a Commercial Property?

When we think of commercial property, we often imagine bustling office buildings, vibrant retail stores, or expansive warehouses.

But, there is a lesser-known facet to commercial real estate that raises an intriguing question: Can you live in a commercial property?

What is Commercial Property?

Firstly, let’s make sure we understand what a commercial property is.

Commercial property refers to real estate that is used primarily for business activities. This can include office buildings, retail stores, restaurants, hotels, and industrial facilities.

These properties are typically zoned and designed to accommodate commercial activities, with features such as open floor plans, ample parking, and convenient access for customers and employees.

Common Uses of Commercial Property

Commercial properties serve a variety of purposes, depending on the specific type of property and its location. A few of their uses include:

  • Stores, shops, malls, and shopping centers where goods are sold to consumers.

  • Office buildings or spaces used for professional businesses. Think law firms, accounting offices, or corporate headquarters.

  • Hospitality, like hotels, motels, bed and breakfasts, and other lodging establishments.

  • Restaurants, cafes, bars, and other food and beverage establishments.

  • Healthcare, like hospitals, clinics, medical offices, and other healthcare facilities.

  • Entertainment such as movie theatres, concert halls, sports arenas, and other entertainment venues.

  • Industrial developments like warehouses, factories, manufacturing plants, and distribution centers.

  • Schools, colleges, universities, and other educational institutions.

  • Banks, salons, dry cleaners, gyms, and other service-based businesses.

  • Storage facilities for individuals or businesses to store goods.

  • Mixed-use developments, which are properties that combine residential, commercial, and sometimes other uses in the same development.

These are just a few examples, and the specific use of a commercial property can vary widely based on zoning regulations, location, and market demand.

image of a basement home with carpets and a small desk in front of the stairs

Can You Live in a Commercial Property?

But can you live in a commercial property?

In many cases, it is not legal to live in a commercial property due to zoning regulations. Commercial properties are typically zoned for business or commercial use, meaning they are intended for activities such as retail, office space, or industrial operations. 

However, some commercial properties may have mixed-use zoning, which allows for both commercial and residential use. In these cases, it may be possible to live in a portion of the property while using the rest for commercial purposes. 

It's important to check local zoning laws and regulations before attempting to live in a commercial property to ensure compliance and avoid any legal issues.

Living in Commercial Properties: How Does It Differ From Residential Living?

Living in a commercial property presents unique challenges and opportunities compared to traditional residential living.

One of the key differences is the zoning regulations that govern the use of the property. Commercial properties are typically zoned for business use, meaning that living in these properties may not be permitted under local zoning laws.

Additionally, commercial properties may lack some of the amenities and features that are commonly found in residential properties. For example, commercial buildings may not have kitchens or bathrooms designed for residential use, which can make living in these properties pretty inconvenient!

However, living in a commercial property can also offer unique benefits.

Some commercial properties have unique architectural features or are located in vibrant urban areas, offering a unique living experience. Living in a commercial property can be more affordable than traditional residential properties, especially in areas where housing costs are high. 💵

The Legal Aspects of Living in a Commercial Property

Living in a commercial property can raise several legal considerations, primarily related to zoning laws and regulations.

Zoning laws are local regulations that divide cities and municipalities into different zones, each with specific allowable land uses. These laws dictate how properties can be used, including whether they can be used for residential purposes.

Zoning Laws and Regulations

Zoning laws typically distinguish between commercial and residential zones.

Commercial zones are intended for business activities, while residential zones are designated for housing. This means that living in a commercial property may be prohibited under local zoning laws, as these properties are not intended for residential use.

image of a beige basement apartment with an office desk and a blue couch

Differences Between Commercial and Residential Zoning

Commercial zoning often comes with stricter regulations compared to residential zoning. For example, commercial properties may have stricter building codes, parking requirements, and noise restrictions.

These regulations are designed to ensure that commercial properties are compatible with their surroundings and do not disrupt residential neighbourhoods.

Restrictions on Living in Commercial Properties

In many cases, zoning laws explicitly prohibit living in commercial properties.

This is because commercial properties are not equipped with the necessary amenities and infrastructure for residential use, such as kitchens, bathrooms, and proper insulation for living spaces.

Potential Legal Issues

Living in a commercial property can also lead to legal issues, such as eviction for violating zoning laws. If a tenant is found to be living in a commercial property in violation of zoning laws, they may be evicted and fined.

Additionally, landlords who allow tenants to live in commercial properties in violation of zoning laws may also face legal consequences.

How to Buy a Commercial Property

If you want to know how to buy a commercial property for living, there are a few steps involved in purchasing a commercial property for residential use:

Research Zoning Laws

The first step in buying a commercial property for living is to research zoning laws and regulations in your area.

Make sure the property is zoned for residential use or mixed-use, which allows for both residential and commercial activities. You might want to familiarize yourself with some basic zoning regulations:

Zoning laws regulate how land and buildings can be used in specific areas. Here are some common examples:

  • Residential: This zoning is for housing purposes only. It typically includes single-family homes, multi-family homes, apartments, and condominiums.

  • Commercial: This zoning is for businesses. It includes retail stores, restaurants, offices, hotels, and other commercial establishments.

  • Industrial: This zoning is for industrial purposes, such as factories, warehouses, manufacturing plants, and industrial parks.

  • Mixed-use: This zoning allows for a mix of residential, commercial, and/or industrial uses in the same area or development.

  • Agricultural: This zoning is for farming and agricultural activities.

  • Recreational/open space: This zoning is for parks, playgrounds, and other recreational areas.

  • Historic preservation: This zoning is for preserving historic buildings and areas.

  • Overlay zones: These are special zoning districts that impose additional regulations or restrictions on top of the base zoning, such as for floodplains, conservation areas, or design standards.

There are also other options if you want to know how to get a commercial loan for a rental property. That’s why it’s vital to have a team of real estate professionals by your side to help you know all your options.

Determine Your Budget

Establish a budget for buying the property, taking into account not just the purchase price but also any renovations or upgrades that may be needed to make the property suitable for living.

Get Financing

There are several financing options available for buying commercial property. These can include:

  • Traditional Commercial Mortgage: Similar to a residential mortgage, this is a loan from a bank or lender that is used to purchase commercial real estate. The property itself serves as collateral for the loan.

  • SBA 504 Loan: This is a loan program administered by the Small Business Administration (SBA) that provides financing for the purchase of fixed assets, including commercial real estate, for small businesses.

  • Commercial Real Estate Investment Trusts (REITs): These are companies that own or finance income-producing real estate across a range of property sectors. Investing in REITs can provide exposure to commercial real estate without the need to directly buy property.

  • Seller Financing: In this arrangement, the seller of the property provides financing to the buyer. This can be beneficial for buyers who may not qualify for traditional financing or who want more flexibility in the terms of the loan.

  • Hard Money Loan: This type of loan is typically issued by private investors or companies and is based on the value of the property rather than the borrower's creditworthiness. Hard money loans often have higher interest rates and shorter terms than traditional loans.

  • Crowdfunding: This involves multiple investors pooling their money to invest in a commercial property. Platforms like Fundrise or RealtyMogul allow individuals to invest in real estate projects with relatively low capital requirements. This could help you if you’re wondering how to buy commercial property with no money or very little down payment.

  • Private Equity: Investors can partner with private equity firms to finance commercial real estate acquisitions. This typically involves larger investments and is more suitable for sophisticated investors.

Each of these options has its own advantages and considerations, so it's important to carefully evaluate them based on your financial situation and investment goals.

Consulting with a financial advisor or real estate professional can help you figure out the right loan for you!

image of a commercial building with sunlight shining into window during the day

Find the Right Property & Due Diligence

Considerations when finding the right commercial property for living include location, size, condition, and amenities. Look for a property that meets your needs in terms of space and location, and that can be easily converted into a residential space.

Then, before finalizing the purchase, conduct a thorough due diligence process to ensure the property is in good condition and free of any legal issues or liabilities.

Purchase Agreement & Closing

Once you have found the right property, negotiate the terms of the purchase with the seller and enter into a purchase agreement. This document will outline the terms of the sale, including the purchase price, closing date, and any contingencies.

The final step in buying a commercial property for living is the closing process. During this time, the necessary legal documents are signed, and the property officially changes hands.

Be sure to work with a qualified real estate attorney to ensure a smooth closing process.

Have a Real Estate Right-Hand Man In CRE Professionals

The idea of living in a commercial property may seem appealing due to its unique features and potentially lower costs. Just make sure you know the many legal and practical considerations to keep in mind, like:

  • Zoning laws and regulations

  • Financing options

  • Finding the right property

  • Additional legalities

It’s crucial to research local zoning laws and regulations to ensure that the property is suitable for residential use. Additionally, obtaining financing and finding the right property are key steps in the buying process.

Have more questions about whether you can live in a commercial property, or about what to do with a commercial property? Reach out to our real estate advisors to find your perfect property solution today!

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