Mixed-Use Properties and How to Finance Them

 In Real Estate Articles

Most of us know that there are two different types of property, residential and commercial, and both of these types require a different approach when it comes to financing. However, there is also a third property type that is more of a hybrid of the two. Imagine for a moment that you want to combine your home with a small business you run, having your residence in one part of the property and your business in another. This would technically be a mixed-use property.

Though this type of property often sounds like a great idea for many small business owners, there is often a challenge presented when it comes to trying to finance mixed-use properties. Conventional loans are available for these properties, however, there are conditions that have to be met in order for a property to qualify. Many conventional loans will require that only a small percent of the property can be used commercially, and the buyer will have to occupy the home full-time as well as run a business from it.

Property appraisals tend to be difficult in these scenarios as well, especially if the mixed-use property is the only one of its kind in the area, being that lenders often refer to recent purchases of similar properties before appraising the unit. In cases where the nearest mixed-use property is miles or even towns away, you might want to consider seeking a commercial loan instead of something conventional.

With commercial loans, the requirements are different than what you can expect with a conventional loan. For example, your projected income from your business might help you qualify, and most of the time, the buyer is not required to inhabit the building.

Mixed-use properties, though relatively uncommon when it comes to financing a mortgage, are sometimes a great way for a small-business owner to establish a storefront while they’re making payments on a home. For more on mixed-use properties, check out this article at RealtyTimes.

Let my team at Keystone Realtors® meet all your real estate needs. I have over 16 years of experience in buying and selling in the Santa Clara and San Mateo County areas, specializing in the high-end, luxury market. Visit our website at https://www.paulphangureh.com/for listings and information. You can contact me at 650-924-2544, or email at [email protected]