An Overview 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 qualified for financing are often made up of many units intended for varied uses, like residential, commercial, cultural, etc. Mixed use loans may be simultaneously short-term and permanent with terms from 6 months to 30 years.
How Does Mixed Use Development Financing Work?
Mixed use loans are sets of various loans: short-term hard money, permanent construction, government-backed, and others. Almost all buildings that have a minimum of two uniquely zoned units can go into 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.|
Below are the various types of mixed use loans and some useful details:
Government Backed Loans
Business loans offered by the USDA, along with SBA 7a, SBA 504, are some examples of mixed-use loans that have government backing. These mixed use development financing options are fixed, with a term of 10 to 30 years. 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 regular loans that banks and lenders, traditional and online, offer. These loans have terms between 15 to 30 years and interest rates in the range of 4% to 6%. They also usually require mixed use buildings to be in good condition before they provide financing. 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. There are various reasons one might apply for a short-term mixed use development financing, but here are the most common:
Competing with all-cash buyers
To prep a mixed use building before transitioning to a permanent loan
If personal requirements for a permanent mixed use loan are not met
To buy and renovate a mixed use building in bad shape
If you want to refinance to a permanent loan at the close of the term