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 can be short-term as well as permanent with terms between 6 months and 30 years.
How Does Mixed Use Development Financing Work?
Mixed use loans are any combination of various kinds of loans, from commercial to hard money to permanent construction and lots more. Almost all buildings that have a minimum of two uniquely zoned units can go into a mixed use loan. In a mixed use building, however, there is often at least a single commercial and a single residential unit that functions as a live/work space or as an investment.
If you’re the owner of a property that gets less than 40{b6911f5ad91ec16a971fdd2767386393fc5beb9854c3520420092e1de505b2ce} of its income from the commercial spaces, and there are at least five residential units in it, a multifamily loan or apartment loan may be suitable for you.
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. This type of mixed use development financing is permanent and has 10 to 30-year terms. Their interest rates start at 3. 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. Interest rates for these loans range from 4{b6911f5ad91ec16a971fdd2767386393fc5beb9854c3520420092e1de505b2ce} to 6{b6911f5ad91ec16a971fdd2767386393fc5beb9854c3520420092e1de505b2ce}, with 15 to 30 years as the term. One requirement is that mixed use buildings be in good condition before financing is possible. However, the owner is not required to use the building with these loans.
Short-Term Loans
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{b6911f5ad91ec16a971fdd2767386393fc5beb9854c3520420092e1de505b2ce} to 12{b6911f5ad91ec16a971fdd2767386393fc5beb9854c3520420092e1de505b2ce}. Short-term mixed use development financing comes in handy for a variety of reasons, such as:
To compete with 100{b6911f5ad91ec16a971fdd2767386393fc5beb9854c3520420092e1de505b2ce} cash buyers
To prep a mixed use building before transitioning to a permanent loan
If you don’t qualify for a permanent mixed use loan because of personal requirements
To buy and renovate a mixed use building in bad shape
When refinancing to a permanent loan upon expiration of the term