An Overview of Mixed Use Development Financing
To fund mixed use buildings, business owners and real estate investors can rely on mixed use development financing. 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.
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. Nearly any building that consists of no less than two units with different zoning may be good for 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’re the owner of a property that gets less than 40% 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. These mixed use development financing options are fixed, with a term of 10 to 30 years. Their interest rates start at 3. Moreover, SBA 504 loans can be used for financing construction and renovations.
Commercial Loans Commercial mixed use loans are the usual loans that can be obtained from banks and lenders, online and physical alike. 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. However, the owner is not required to use the building with these loans.
Mixed use development financing comes in several varieties and may include commercial bridge loans as well as private money loans, among many others. These short-term loans have 6-months to 6-year terms, with interest rates of 4% to 12%. There are various reasons one might apply for a short-term mixed use development financing, but here are the most common:
To compete with 100% cash buyers
To prepare a mixed use building prior to refinancing to a permanent loan
If you fall short of the personal permanent mixed use loan requirements
Buying and renovating a mixed use building that is in poor shape
If you want to refinance to a permanent loan at the close of the term