Basics of Mixed Use Development Financing
Real estate investors and business owners can use mixed use development financing to help them fund mixed use buildings. Mixed use buildings eligible for financing usually have several units zoned for various purposes, such as commercial, industrial, cultural, etc. Mixed use loans can be short-term and at the same time permanent, terms going from 6 months to 30 years.
How Mixed Use Development Financing Operates
As its name suggests, a mixed use loan is a fusion of several kinds of loans – short-term hard money, commercial, government-backed and industrial, and more. Nearly every building that has at least two units with different zoning can be accepted for 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% 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. 75% to 8. Additionally, SBA 504 loans can be used to fund construction and renovation projects.
Commercial Loans Commercial mixed use loans are the typical loans provided by brick-and-mortar and online banks, and by other lenders. These loans have terms between 15 to 30 years and interest rates in the range of 4% to 6%. Mixed use buildings should also be in good shape before financing. However, the owner is not required to use the building with these loans.
There are different kinds of mixed use development financing – for example, hard money loans and other private money loans, commercial bridge loans, and more. Such short-term loans are paid at interest rates between 4% and 12%, and their terms can be anywhere from half a year to 6 years. 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
Getting a mixed use building if you want to refinance to a permanent loan
If personal requirements for a permanent mixed use loan are not met
To buy and renovate a mixed use building in bad shape
When refinancing to a permanent loan upon expiration of the term