Are you considering purchasing a mixed used property? A mixed use property is one that meets at least two different purposes, such as residential and commercial. It could be a building with stores on the first floor and apartments above it. If so, you’ll likely need a mixed use property loan. Mixed use property loans aren’t like typical mortgage financing. They have some unique characteristics. Below are a few things you should know before you apply for a mixed use property loan.
Mixed Use Properties are Considered Higher Risk
Because mixed use properties are a combination of both residential and commercial spaces, they are considered a higher risk by lenders. This is because if one of the spaces becomes vacant, it could negatively impact the income of the entire property. There’s not just the risk of an apartment being vacant, but also storefronts being vacant. As a result, lenders may require a higher down payment and charge a higher interest rate for a mixed-use property loan.
You May Need to Provide More Documentation
The application and underwriting process for a mixed use property loan could be more difficult than the process for a traditional mortgage. When applying for a loan for a mixed use property, you may be required to provide more documentation than you would for a single use property. This could include information on the income of the commercial space, such as lease agreements and financial statements. Lenders will want some reassurance that the commercial space has been consistently filled in the past. It’s important to have all of your documentation in order before applying for a loan, to ensure a smooth and efficient process.
Look for Lenders Who Specialize in Mixed Use Property Loans
Not all lenders are familiar with the unique aspects of mixed use properties, and this can make it difficult to secure financing. To increase your chances of getting approved for a loan, look for lenders who specialize in mixed-use properties and have experience working with this type of property. That’s especially true if you plan to renovate the property. According to Investopedia, many specialized lenders will offer up to 90% of the purchase price and 100% of renovation costs if you are an experienced investor.
Ready to get started with your mixed use property? Contact West Coast Commercial Capital LLC today. We can help you obtain a mixed use property loan to fund your purchase. Let’s connect today and start the conversation.