Can You Renovate and Live in a Warehouse?

It's a common sight in many areas – an abundance of commercial property standing vacant, but no suitable homes to buy. Some buyers are taking advantage of this situation by buying old warehouses and converting them into prime urban real estate. Before you rush out and start bidding on the nearest warehouse, pause for a moment. There are few things you need to consider before launching into a renovation project.

​Read More:​ How to Live in Commercial Property

For any warehouse you have chosen, the biggest stumbling block will be zoning restrictions. If the property is commercially or industrially zoned, you will not be able to convert it to residential use without a zoning variance – a specific waiver that allows you to use the property in a way that's not permitted by the current zoning ordinance. The first step, then, is to speak to your local planning office. Zoning laws depend on where you live, and you need to find out if the zoning laws allow for residential conversions. In cases like this where you are "down-zoning", it is often easier to get a zoning variance than if you were "up-zoning" from residential to commercial use. You will likely go through a lengthy process to persuade the zoning board that current regulations block effective use of the property.

If the warehouse is zoned for commercial use, you may have to get a commercial loan – even if the city gives you a zoning variance. Commercial loans usually mean more money down and a higher interest rate. You're also in the unusual situation where a commercial appraiser has to look at other properties with commercial zoning, then show that your proposed residential usage will not negatively impact the commercial value. If the value is going to go down when you change the building's use, you may be out of luck for a loan. Speak to several banks before you start looking for properties.

When going from commercial to residential, the home you're creating will have to be brought up to residential building codes. That likely means rehabilitating plumbing, electrical, heating and fire protection systems, and it could also mean replacing windows and elevators. Then there are the industrial "nasties" that may come up along the way, like asbestos and lead paint. Your best bet is to talk to a real estate expert who can give you some idea of the scope and cost of renovations. Don't try to cut corners. If you are caught with an illegal apartment, you likely will be fined and made to legalize the violation by bringing the warehouse up to code.

There may be some additional considerations with the location, such as whether the warehouse is situated in a noisy or smelly area close to manufacturing or other commercial businesses. It could affect your home's resale value if family buyers are put off by the area. The most likely candidates for warehouse-to-residential conversion will be in locations where there's strong demand for multi-family housing. Check practicalities like nearby schools, transit options and parking.

​Read More:​ Commercial Land Vs. Industrial Land