The Money Mustache Community

Learning, Sharing, and Teaching => Real Estate and Landlording => Topic started by: hodge on January 12, 2016, 05:35:39 AM

Title: Tenant wants to start home business
Post by: hodge on January 12, 2016, 05:35:39 AM
I'd be curious to hear what this part of the community thinks about my situation: I'm a tenant interested in doing the selling on Amazon/eBay thing as a side hustle, but lease specifies no business activity. Is this something that any of your tenants have approached you about? If one were to approach you for permission, what concerns might you have/what information would you want to see before you made a decision?

My sense is that this may ultimately end up being more of a town bylaws issue than one of landlord permission. The property is in the town's business district and includes storefronts beneath me, but from what I've found on the town website, home businesses are restricted to property owners (though the way home businesses are defined, with mention of customers coming and going, makes me wonder how an online business would fit).

Does it make sense to approach the landlord first? The town office? A lawyer/CPA? Or am I likely going to have to find a different apartment if I want to move forward with this?
Title: Re: Tenant wants to start home business
Post by: CowboyAndIndian on January 12, 2016, 05:38:41 AM
In the traditional business (e.g a CPA for example), customers would come to the house. There would be a constant stream of unknown people and there would be parking and noise issues. This is what a landlord is trying to prevent.

In your case, you have an online business. No customers at your house, no parking issues etc.

As a landlord, I would not have an issue with this.
Title: Re: Tenant wants to start home business
Post by: GoatStache on January 12, 2016, 11:01:41 AM
I would go on a popular website that lets you ask a local attorney, something like this should be a shoulder shrug but I am a paranoid landlord.

Remember, tenants will always do something stupid if allowed. They start posting on CL and allowing local pick up... think of an array of situations where someone comes to your rental and is hurt or something dumb happens as a result of the transaction.

I would also track them on ebay and raise their rent if they have a lot of transactions ;)
Title: Re: Tenant wants to start home business
Post by: Erica on January 12, 2016, 07:56:12 PM
Your Landlord is concerned a business will somehow affect his house. This will not affect his house.

I sell on Ebay and Amazon so if I can help you, let me know.

I am paid mileage and an hourly wage to take one of my Clients to the Thrift Stores, hence one reason why I got the job to have my online selling supplement it. All my Ebay is done at work during downtime, packaged up, listed, etc..only postage is done at my house and we live near the post office. Unlike most Sellers, my December sales are not elevated because we are expected to work alot of overtime in Dec. The overtime is great but I could probably do just as well doing Ebay So this is just the typical month

Numbers are- $287 for Ebay & Amazon combined +$50 on Craigslist. Equates to $330 take home per month. That is average, about $300-$325 per month, sometimes a little more. . You have to divide the numbers you see in the links by 2 months as the links show 60 days worth of sales. Returns, Seller Fees, Postage, & time invested to list and buy is all factored into the price.

It brings my hourly wage up a few dollars. December is not a better month for me because we are expected to work 40% more the last two weeks but the overtime is great. I just have time to list the regular number of items. Normally I think Sellers can expect to make double from end of Nov- Mid December or so.  I used to make as much as $500 per mo., double that in December but don't hardly get that high much anymore.

Good luck with your new business, that is so exciting! :)
 It adds around $2+ to my hourly wage. Makes $13.50 per hr =$15.50 per hr during my two 18 hr shifts

Title: Re: Tenant wants to start home business
Post by: Erica on January 12, 2016, 08:03:20 PM
When I sell on Craigslist, I always leave the item outside. The buyer puts the money under the mat as I have no interest in staying home.

 I've never had any problems with anyone whatsoever in 10 years (except getting lost). Everyone has paid which surprises me

Title: Re: Tenant wants to start home business
Post by: electriceagle on January 15, 2016, 12:15:55 AM
Most people who buy and sell things on ebay treat it as a personal activity rather than a business. They never get a business license and never have clients over to their home.

The landlord is likely concerned about liability. If your business generates liability and you don't have insurance, he or his insurance could be faced with the cost of defending a suit.

If you ask your landlord, you will take away his ability to say that he did not know about your business. He will likely refuse or ask you to produce a commercial liability policy with him listed as "additional insured".
Title: Re: Tenant wants to start home business
Post by: Blueeyes7767 on January 16, 2016, 04:54:18 PM
Actually, it depends on quantity of sales.  But if you sell on ebay or Amazon and even an in-home transcriptionist, blogger or a freelance assistant on - line - most states and communities requre a business license.  If you are "selling" you also will have tax revenue due to the State.  Keeping good financial records is a must. 

Zoning could be the property owner's concern.  With an on-line business and no foot traffic, yard/window advertising, etc. It may not be an issue after all.  I would get it in writing and be sure to specify these points on the business license application.
Title: Re: Tenant wants to start home business
Post by: MustacheAndaHalf on January 16, 2016, 11:04:33 PM
A person putting 5 items up for sale more likely has a hobby than a business.  The IRS has different rules for businesses vs hobbies (business deductions, home office deduction, etc).  Why not try a few items as a hobby, and see what it's actually like first?

You might find the sales + fees + shipping come much closer to your costs than you expect.  For example, on Ebay most items have a 10% commission, and most people accept PayPal (2.9% + $0.30).  So if you sell a $10 item, you might owe $1 to eBay, $0.59 to PayPal, and another $2 or so to the post office for shipping.  You might be out 1/3rd of your sale before even considering the price you paid for the item you're selling.

I think you should see if a few items sold on eBay works for you before worrying about if you have a business.