Mixed use development financing is designed for business owners and real estate investors who want to finance 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 as well as permanent with terms between 6 months and 30 years.
How Does Mixed Use Development Financing Work?
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. Almost all buildings that have a minimum of two uniquely zoned units can go into a mixed use loan. Generally though, in every mixed use building, there is at least one residential and one commercial unit that serves as-as a live/work space or investment.
If you own a property with no more than 40% of its earnings coming from the commercial spaces, and it has more than five residential units, you could be eligible for a multifamily loan or an apartment loan.
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
The government actually backs certain mixed-use loans, namely USDA rural development business loans, and SBA 7a and SBA 504. Such kind of mixed use development financing is permanent, and its terms range from 10 to 30 years. 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 regular loans that banks and lenders, traditional and online, offer. Such loans’ interest rates start at 4% and may go up to 6%, while terms can be anywhere from 15 to 30 years. Mixed use buildings should also be in good shape before financing. However, with these loans, the building need not be occupied by the owner.
Short-Term Loans
Mixed use development financing comes in several varieties and may include commercial bridge loans as well as private money loans, among many others. 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. Short-term mixed use development financing comes in handy for a variety of reasons, such as:
To compete with 100% cash buyers
Getting a mixed use building if you want to refinance to a permanent loan
If you fall short of the personal permanent mixed use loan requirements
To buy and renovate a mixed use building in bad shape
When you refinance to a permanent loan as the term ends
