Mixed-use properties are composed of multiple units zoned for different purposes such as residential, commercial, industrial and institutional. Almost any building that has two or more units of different usage qualifies for mixed-use property financing.
Whether you're a business owner or real estate investor, mixed-use properties make sense when you plan on living in one space and operating out of the rest. So how can you find the right loan provider for your mixed-use property? Below are some tips to help you secure the financing you need.
Determine What the Loan is For
There are many different types of mixed-use mortgage loans available. By identifying your needs, you can determine the best loan for your situation.
For example, are you using the loan to purchase or construct a mixed-use property? Are you looking to do a cash-out refinance? Or perhaps you need financing to rehab or remodel the property.
When you determine what you need the financing for, you can work with a hard money lender to get the loan you need. Government-backed, short-term and commercial mixed-use loans are all available with different terms and rates.
Find a Hard Money Lender
Individuals, corporations, partnerships and LLCs can apply for mixed-use financing. You can work with a bank or credit union, but many people prefer to work with a hard money lender. Hard money lenders tend to be more flexible because they use the property as collateral instead of your income and credit.
Additionally, hard money lenders offer quick cash so that you can fund your purchase right away. Mixed use property financing tends to have higher interest rates than other loans, but the terms are short. With the revenue you earn from your business or rental properties, you can pay back the loan relatively quickly.
Know the Terms of Your Loan
When you find a hard money lender that you're comfortable working with, make sure you understand the terms and conditions of your loan. Generally speaking, mixed-use loans from private lenders have short terms ranging from six months to six years, with interest rates ranging from 5 percent to 16 percent.
Other things to ask about are loan origination fees, exit fees, extension fees and prepayment penalties. And while hard money lenders tend to be more flexible, they might still ask for your credit score, debt service coverage ratio and years of experience in rehab or renovation projects.
Find Funding for Your Mixed-Use Property Today
First Funding Loans is a team of hard money lenders who provide financing to business owners and real estate investors interested in mixed-use properties. We invest in people and their ideas - not their credit scores and incomes. Contact us today to learn more about our lending options for mixed-use properties.