Understanding the differences of a
mixed-use building loan.
A mixed-use building loan applies to properties that are comprised of multiple units zoned for different uses, including residential, commercial, industrial and institutional. Almost any building with at least two units of different usage qualify for a mixed-use building loan.
Both business owners and real estate investors may seek a mixed-use building loan. Business owners will often live in one of the residential units and operate out of the commercial space while real estate investors will typically act as the landlord for both the residential and commercial tenants.
While residential tenants provide a more stable source of rental income, commercial tenants, such as ground floor retail, are usually willing to pay more for rent. Therefore, commercial tenants play an important role in evaluating the revenue potential of mixed-use properties. As a result, the value of two different buildings in the same area may differ simply because of the composition of their tenants.
Our experience in providing mixed-use building loans allows us to see the potential that other less-experienced lenders may miss.
Our FlexPerm Loan is a great program for financing mixed-use buildings, especially if you're clients are self-employed investors or small business owners that have a limited credit history or write off expenses to minimize their tax liability. This program offers easy qualification on a purchase or cash-out refinance with the option to remain in the loan for up to 30 years with no balloon payment.
Since our mixed-use building loans are asset-based, personal income isn’t required. However, determining the revenue-generating potential of a mixed-use building can be tricky and depends largely upon the mixture of tenants. This is where our expertise in evaluating the value of mixed-use buildings is essential in appraising the property.
Start closing mixed-use building loans today.
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