Property Management -- Allowing A Home Based Business In A Rental Unit

Many property management companies have a blanket rule against using a real estate rental for a home-based business and often for good reason.However, like most things there are two sides to every issue.There are some types of home-based businesses that may actually help you keep a good tenant in place.Rather than have an inflexible policy, a good property management company will carefully consider each case individually.

How Will The business Impact The Real Estate Rental?

If the home based business requires a large number of people coming and going, this may have a large negative impact on the real estate rental.Simply by the number of people coming in and out, there will be greater wear and tear on the carpet, people will be touching the walls and fixtures, and the amount of trash produced will increase.The impact may not be noticeable at first glance but over time, this will definitely put a greater stress on the real estate rental.

As the business volume increases, so will the amount of traffic produced.Customers will require a larger number of parking spaces, which will quickly become an issue if the building was not designed to accommodate such volume.Complaints will start to come into the property management office as other tenants find customers parked in their allotted spaces.

If the situation goes unattended, you run the risk of driving off other potentially better tenants.You'll also want to be aware of how deliveries are to be made and how often to expect them.Delivery trucks can be very disruptive in a residential neighborhood.

Be Aware Of Zoning Laws

Regardless of your policy on home-based businesses in real estate rentals, you will need to be aware of the local zoning laws.

Some cities make it illegal to have any type of home-based business in a residential area.Sometimes these laws are subject to review and exception.

For example, running a child care business will have many restrictions but running an internet based business usually will have few or no restrictions.When a home-based business is allowed, the property management will want to consult with the tenant about the number of customers they expect on a regular basis.If a large number of clients are expected, they may fall under the guidelines of the Americans with Disabilities Act, which could have an impact on the use of the remaining part of the building.

Make Sure Everyone Involved Is Protected

If a home-based business is approved, an agreement ahead of time between the property management and tenant should be made as to who is responsible for any damage that may occur while the business is under operation.

You'll want to consult with your insurance agent to guarantee that your policy is in full force if a business is operated in your real estate rental.You may be required to purchase additional or modified insurance coverage and you may want to have the tenant take out a policy to cover your potential loss as well.

If the home-based business is very small and doesn't have a large client base coming and going frequently, such as with an internet based company, it may actually help you to allow the business because you keep a good paying tenant.A satisfied tenant is a good source of word of mouth advertising.However, if the home-based business is going to cause problems down the road and become a liability to you, don't hesitate to try to seek a compromise or refuse the rental.The short-term gain will not be worth the long-term headaches.

About the Author

Christine O'Kelly writes for Chicago Beal Properties.

With 80+ years experience being a property manager and real estate rental company, Beal Property, LLC offers an apartment rental in many of the city's historic neighborhoods.

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