Zoning Basics for Landlords
Zoning laws are a major hurdle for many landlords. Laws can vary widely from city to city and may or may not be consistently enforced.
Zoning laws exist to limit certain types of property to specific areas of a city. For example, a power plant should not be located in a residential area, and a commercial area should generally not contain residential dwellings. Zoning laws help residents and property owners coexist peacefully, and they can help limit disturbance and nuisance calls.
Landlords and investors looking for rental properties must be especially careful not to fall afoul of zoning laws. Zoning laws can change over time, too, which means a rental property that is completely legal today may not stay that way in perpetuity.
Owners of large apartment complexes are more vulnerable to the vagaries of zoning laws. If you have a large, multi-unit complex, and there are frequent visitors, neighbors may file complaints with the local zoning commission. The behavior of your tenants can also invite zoning complaints, especially if your tenants run businesses from your rental property.
Here are several steps you can take to help ensure that you stay on the right side of all applicable zoning laws.
- Limit your tenants' activities. If your rental property is in a residential neighborhood, you can request that your tenants ask permission before they begin running a business from their dwelling. If their home-based business does not result in frequent traffic or visitors, there should not be a problem. But if your tenant plans to run a beauty salon out of the apartment, the resulting customer traffic may create a disturbance.
While your tenants have the right to lead their lives however they choose, while they are renting your property, you have the right to place a limit on their activities, especially if the activity may result in negative consequences for you.
- Learn your zoning laws ahead of time. Take some time to familiarize yourself with your local zoning laws before purchasing a rental property. You will also need to stay abreast of any changes to local zoning laws and how these changes may affect your rental property.
If there are other landlords in your area who are having difficulties with zoning laws, you may want to organize as a group to change the laws that may be limiting your ability to profit from your rental properties. A concerted effort from several landlords will be more effective with a zoning commission than a single person.
- Know your city's districts. If your city is neatly divided up into specified districts for residential, commercial, and industrial zones, you may not have a problem with zoning laws. However, as urban sprawl continues, these lines of demarcation are becoming less clear. More and more apartment complexes are located within commercial or industrial districts.
- Your property's potential may be affected by the zone. If your rental property is located in the heart of a noisy commercial or industrial district, this may affect your ability to attract new tenants. Most people do not enjoy listening to industrial noise all day, and this can be particularly troublesome if a factory operates around the clock.
While this may make it easier for you to attract tenants who work in this area, you may also run into zoning difficulties. This is an important point to consider before purchasing a rental property. If you are unsure of how zoning laws may affect your potential rental unit, investigate your situation before becoming embroiled in a zoning battle.
Your property value may also be affected by the zone it is currently in. If neighboring structures are in poor shape, or they are not kept up as residential properties normally are, this can adversely affect the value of your property. This can lead to many problems for landlords, especially if you plan to resell the property at a later date.
