We all love small business, right? It stimulates the local economy, and helps a person grow their wealth while providing a service for the community. So, when a tenant wants to start a bread baking business from your house, it seems like a no-brainer right? You get to be a business-friendly landlord and help your tenant and the community. And, you might even get some free bread!
Sadly, allowing this comes with some major downsides which should give you pause. Remember, you are a small business owner too, and you have to protect it. Here are the reasons why you should not allow a small business in your house rental.
Just Don’t Do It
- Noise / odor / waste – depending on the business, they might generate a lot of any of these. This could be a nuisance for neighbors and cause you headaches.
- Cost – unless the tenant is paying for all the utilities, your bills will get larger and they are difficult to predict. They will also grow as the business does.
- Violation of Ordinances – the municipality might have restrictions on small businesses in residential areas. Once you’ve agreed to this with the tenant, you’ll have a big decision to make if you receive a letter from the city (and you’ll be the one getting the nastygram as the owner).
- Insurance – Your insurer may object to a business. Your premium will likely increase or you may need to find a new insurer.
- Traffic – Bread will need to be picked up. There will be a lot of cars coming and going for a thriving business. What if it is just a mail order thing? Trucks will be coming and going.
If you insist on allowing this, you need to write a policy for it. Put in it exactly what you will allow and what you will not allow. Then, if the tenant meets the policy requirements, have your attorney amend the lease to require the tenant to provide insurance, no customer pickups, etc. Your safest route is to say no. If you want a business tenant, purchase a commercial building. Leave the businesses to the commercial landlords.
