Basics of Mixed Use Development Financing
Mixed use development financing is designed for business owners and real estate investors who want to finance mixed use buildings. Mixed use buildings eligible for financing usually have several units zoned for various purposes, such as commercial, industrial, cultural, etc. Mixed use loans may be simultaneously short-term and permanent with terms from 6 months to 30 years.
Mixed Use Development Financing – How It 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. Almost all buildings that have a minimum of two uniquely zoned units can go into a mixed use loan. But usually, a mixed use building will have, at the very least, a commercial and a residential unit for 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.|
Below are the various types of mixed use loans and some useful details:
Government Backed Loans
Mixed-use loans supported by the government include SBA 7a, SBA 504, and USDA rural development business loans. These mixed use development financing options are fixed, with a term of 10 to 30 years. 75% and may reach up to 8. Construction and renovation financing is also possible with SBA 504 loans.
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. Mixed use buildings should also be in good shape before financing. However, with these loans, the building need not be occupied by the owner.
There are many types of mixed use development financing, including, among several others, private money loans and commercial bridge loans. These short-term loans have 6-months to 6-year terms, with interest rates of 4% to 12%. Short-term mixed use development financing can be used for various reasons, the most popular being:
Competition with all-cash buyers
Getting a mixed use building if you want to refinance to a permanent loan
If you don’t qualify for a permanent mixed use loan because of personal requirements
Buying and renovating a mixed use building that is in poor shape
When you refinance to a permanent loan as the term ends