Rental Property Investor · Member since 2018 · 19 posts · 9 votes
Hello All,
I am a Newbie to Real Estate Investing and have just purchase my second 2 family house. The house I purchased is in Rochester NY in the 19th Ward and I have a property manager looking over the property as I live in in Queens NY. I have a potential tenant that is looking to rent out the property but wants to run a child day care center out of it. I am a little bit iffy to do so as I do not know much about it, she says she has all the legal documents/certifications needed for it. Anyone have any advise on this? Thanks in advance!
Hi @Lucia Lilac, I'm up in Rochester as well. Have you spoken to your property manager about this yet? There's a lot to take in;
1) For the other tenants in the duplex, noise and traffic.
2) for the property manager, additional liability for slip and falls from so many people coming and going, conflicts from pets with kids, making sure the lot is plowed first every day etc. Safety inspections, requirements for mulch and safety equipment outside around play areas etc. all have to be considered.
3) zoning for daycare - is it even legal to do a daycare here? Typically you need a permit AFTER the location is occupied
4) certification from the local school district, typically there is a site-inspection required before they will add them to the list
5) your insurance policy as the owner of the building may exclude protections or void coverage if a daycare is operated out of the location. Check this carefully.
Hi @Lucia Lilac, I'm up in Rochester as well. Have you spoken to your property manager about this yet? There's a lot to take in;
1) For the other tenants in the duplex, noise and traffic.
2) for the property manager, additional liability for slip and falls from so many people coming and going, conflicts from pets with kids, making sure the lot is plowed first every day etc. Safety inspections, requirements for mulch and safety equipment outside around play areas etc. all have to be considered.
3) zoning for daycare - is it even legal to do a daycare here? Typically you need a permit AFTER the location is occupied
4) certification from the local school district, typically there is a site-inspection required before they will add them to the list
5) your insurance policy as the owner of the building may exclude protections or void coverage if a daycare is operated out of the location. Check this carefully.
The permitting agency can have inspections and result in lots of things to do, eg. any peeling paint, if the house is older, lead abatement, etc. If you go ahead, put in the lease that the tenant is responsible for anything required from the inspections. Also if on septic you may exceed the system's ability to handle the sewage.
Thank you for your replies! I told my property manager it's a no go. I also spoke to my Home Owners Insurance and they said it is not covered under my policy. Glad I came here and asked first before renting it out. Thanks again!
@Lucia Lilac glad we could help. I'm honestly surprised your property manager didn't advise you away immediately. There's nothing in the list of items that people brought up that should come as a shock to anyone in the industry.
The permitting agency can have inspections and result in lots of things to do, eg. any peeling paint, if the house is older, lead abatement, etc. If you go ahead, put in the lease that the tenant is responsible for anything required from the inspections. Also if on septic you may exceed the system's ability to handle the sewage.
Rochester is basically 100% sewers, for better or worse.
As far as the inspections, Rochester NY has the most strict C of O laws in the US - to the point where Chicago and Detroit came to learn how we do it here. They would never be allowed to occupy a unit that tests positive for lead or has peeling paint in any way. NY state passed a law that you can't even legally charge rent without a current C of O from the local municipality. It's not an easy market, despite being in the top 5 real estate markets in the US for the last few years.
@Lucia Lilac Zoning is a good point which @Andy McQuade brought up but my big concern would be insurance.
Would such a use totally invalidate your current insurance? Would getting a more robust policy that covers you completely make this economically unviable? Please diligence this before making your decision.
I would definitely make sure zoning, licenses, permits, etc. are all in hand and get that verified with the city. I would also not mind charging more given the business element and potential wear & tear on the building. This will also mean more expenses for you as some have pointed out, and possible deterrence for other tenants.