Financing for Mixed-Use Properties

Properties that consist of multiple units, zoned for different uses, such as a commercial businesses, residential, industrial and institutional are known as mixed-use properties. Almost any building that has as least two different usages within the units qualifies for mixed-use financing, such as a restaurant that has an apartment above it.

Business owners and real estate investors can look into using a mixed-use loan. A restaurant business may want to live in the apartment above their restaurant, while the real estate investors may want the properties to act as landlord for residential and commercial tenants.

Residential tenants usually provide a more stable income, but commercial tenants such as a restaurant or ground floor retail establishment are usually willing to pay higher rent, and for this reason they are part of the decision when evaluating the potential revenue for a mixed use property. For this reason, property value of different multi use buildings may be different despite their location being similar. A benefit to this is that it might change how the loans are assessed. Instead of a traditional loan, an asset based loan may be used because lenders are able to evaluate the tenant mix and value of the mixed use buildings, and see if they’re a good risk for both the lender and the borrower.