Real estate investors and business owners can use mixed use development financing to help them fund mixed use buildings. Financing-qualified mixed use buildings generally come with a number of units zoned for different purposes, like residential, business, institutional, etc. Mixed use loans may be simultaneously short-term and permanent with terms from 6 months to 30 years.
How Mixed Use Development Financing Operates
As its name suggests, a mixed use loan is a fusion of several kinds of loans – short-term hard money, commercial, government-backed and industrial, and more. Nearly every building that has at least two units with different zoning can be accepted for a mixed use loan. Generally though, in every mixed use building, there is at least one residential and one commercial unit that serves as-as a live/work space or investment.
If you own a property that earns under 40% of its income from the commercial units, and it has at least five residential units, you may be considered for a multifamily or an apartment loan.
Types of Mixed Use Loans
There are several types of mixed use loans, the most common being a government-backed mortgage that comes from the SBA or USDA.|Mixed use loans come in varied forms, and the more popular type is a government-backed mortgage provided by the SBA or USDA.|Mixed use loans come in different shapes and sizes, most common of which is a government-backed mortgage from the SBA or USDA.|
The following are the different types of mixed use loans along with some handy details:
Government Backed Loans
The government actually backs certain mixed-use loans, namely USDA rural development business loans, and SBA 7a and SBA 504. This type of mixed use development financing is permanent and has 10 to 30-year terms. Their interest rates can be anywhere from 3. Additionally, SBA 504 loans can be used to fund construction and renovation projects.
Commercial Loans Commercial mixed use loans are the typical loans provided by brick-and-mortar and online banks, and by other lenders. Such loans’ interest rates start at 4% and may go up to 6%, while terms can be anywhere from 15 to 30 years. One requirement is that mixed use buildings be in good condition before financing is possible. But occupancy of the building by the owner is not required.
Mixed use development financing comes in several varieties and may include commercial bridge loans as well as private money loans, among many others. Such short-term loans are paid at interest rates between 4% and 12%, and their terms can be anywhere from half a year to 6 years. Short-term mixed use development financing can be used for various reasons, the most popular being:
To compete with 100% cash buyers
Getting a mixed use building if you want to refinance to a permanent loan
If you fall short of the personal permanent mixed use loan requirements
Purchase and renovation of a mixed use building in compromised condition
When refinancing to a permanent loan upon expiration of the term