Mixed Use

Mixed Use Property refers to buildings that contain a variety of commercial and/or residential uses where no individual use accounts for more than 50% of the property.

MixedUse

Bank Lender: Mixed Use

Banks can be a good alternative to Fannie Mae and Freddie Mac for Mixed Use properties. Banks provide adjustable rate (ARM)  or balloon mortgages with fixed rate terms to match your intended holding period.  Rates and fees are very competitive.   Banks generally require a class A or B property, full documentation, strong property cash flows, solid borrower credit, liquid assets and investing experience. 

Pros

  • Low Rates
  • Diverse property types
  • Flexible underwriting
  • Variety of loan programs

Cons

  • Extensive documentation
  • Full recourse
  • Shorter amortizations and fixed rate terms versus CMBS or agency lenders
  • Cash out refinances limited

Loan Amount
1MM+

Min. Rate
3.5% – 6.5%

Term Length
Up to 10 Yrs

Closing Time
4 – 6 Weeks

Max LTV
75% LTC

Amort.
Up to 25 Yrs

Private Lender: Property Income Based

Private Lenders are an excellent funding source for long term Mixed Use property loans. Private lenders generally loan to a broader range of property classes, loan amounts, borrower credit scores, and debt service coverage levels than banks or Fannie Mae and Freddie Mac. Private lenders fill the gap for smaller properties where required loans are below $1 million. Another benefit is that private lenders qualify “Ability to Pay” based on the cash flows of the subject property and not the overall net income of the borrower. Loans are generally risk based priced with the loan to value, credit score, debt service coverage ratio and investor experience determining the borrower cost of financing.

Pros

  • Based on Lease Income
  • No balloon
  • Unlimited cash out
  • Quick approval
  • Fast closing time
  • Wide variety of property types
  • Limited or no seasoning required

Cons

  • Need fair credit score (650+)
  • Higher interest rate vs. banks
  • Prepayment penalty
  • No construction

Loan Amount
150K+

Min. Rate
5.75% – 8.5%

Term Length
Up to 10 Yrs

Closing Time
4 – 6 Weeks

Max LTV
80%

Amort.
Up to 30 yrs

Freddie Mac: Mixed Use

GSE Agency Lenders include Fannie Mae, Freddie Mac and FHA. Agency Mixed Use loans generally are known for having the best rates available for high loan to values and long term fixed periods. Freddie Mac Mixed Use loans are full documentation loans that require investor experience, solid net worth and properties that meet the agency requirements. Borrowers willing to go through the required documentation and process, while meeting the agency requirements, will be rewarded with a long term, low rate loan.

Pros

  • Low rates & costs
  • Higher leverage (80% LTV)
  • Long amortizations (30-yrs)
  • Cash out available
  • Variety of fixed rate products
  • Non-recourse
  • Limited personal financial documentation
  • Flexible prepayment options
  • Assumable & streamlined

Cons

  • Conservative underwriting
  • Sponsor liquidity requirement
  • Property must be stabilized

Loan Amount
$1MM – $7MM

Min. Rate
5.0% – 6.3%

Term Length
5, 7, 10, 20 Years

Closing Time
8 – 12 Weeks

Max LTV
80%

Amort.
Up to 30 Years

Fannie Mae: Mixed Use

GSE Agency Lenders include Fannie Mae, Freddie Mac and FHA. Agency Mixed Use loans generally are known for having the best rates available for high loan to values and long term fixed periods. Fannie Mae Mixed Use loans are full documentation loans that require investor experience, solid net worth and properties that meet the agency requirements. Borrowers willing to go through the required documentation and process, while meeting the agency requirements, will be rewarded with a long term, low rate loan.

Pros

  • Low rates & costs
  • Higher leverage (80% LTV)
  • Long amortizations (30-yrs)
  • Cash out available
  • Variety of fixed rate products
  • Non-recourse
  • Limited personal financial documentation
  • Flexible prepayment options
  • Assumable & streamlined

Cons

  • Conservative underwriting
  • Sponsor liquidity requirement
  • Longer closing process
  • Property must be stabilized

Loan Amount
$1MM – $7MM

Min. Rate
5.0% – 6.3%

Term Length
5, 7, 10, 12, 15, 30 Years

Closing Time
8 – 12 Weeks

Max LTV
80%

Amort.
Up to 30 Years

Private Lender: Bank Statement Based

Private Lenders are an excellent funding source for long term Multi Use loans. Private lenders generally loan to a broader range of property classes, loan amounts, borrower credit scores, and debt service coverage levels than banks or Fannie Mae and Freddie Mac. Private lenders fill the gap for smaller properties where required loans are below $1 million. Bank Statement Based loans take into account the gross revenue or stated income of the property. Loans are generally risk based priced with the loan to value, credit score, liquid assets and investor experience determining the borrower cost of financing.

Pros

  • No tax returns
  • No balloon
  • Unlimited cash out
  • Quick approval
  • Fast closing time
  • Wide variety of property types
  • Limited or no seasoning required

Cons

  • Need fair credit score (650+)
  • Higher interest rate vs. banks
  • Prepayment penalty
  • No construction

Loan Amount
$150K+

Min. Rate
7.0% – 9.8%

Term Length
Up to 10 Years

Closing Time
3 – 6 Weeks

Max LTV
80%

Amort.
Up to 30 Yrs

Private Lender: Hard Money Bridge

Private Lenders are the primary funding source for Hard Money Loans. Hard Money Loans are often referred to as “Asset Based” Loans where the lender believes there is enough equity in the property to quickly dispose of it if the borrower were to default on the loan. Hard Money Loans are short term loans of 12 – 24 months duration. Lenders generally expect the loan to paid off through the sale of the property or a refinance by another lender. Hard Money loans are very useful when a quick close is required or the borrower is unable to obtain financing from traditional lending sources.

Pros

  • Flexible underwriting
  • Quick Closing
  • Interest-only Payments
  • Up to 2 Yr Term

Cons

  • High Interest Rate
  • Higher Fees
  • Short Term
  • Extension Fees, if more time is needed.

Loan Amount
150K+

Min. Rate
8.0% – 13.0%

Term Length
Up to 3 Years

Closing Time
2 – 4 Weeks

Max LTV
75%

Amort.
Interest Only

Private Lender: Rehab or Restabilization Bridge

Private Lenders are the primary funding source for purchase-rehab market. These lenders provide short term loans which include both the funds to purchase or refinance the property and funds to renovate the property. Pricing and loan amounts are heavily influenced by borrower rehab experience. Rehab funds are typically held in a rehab holdback account and released on draws.

Pros

  • Flexible underwriting
  • Quick Closing
  • Interest-only Payments
  • Pricing Based on Experience and less on Credit

Cons

  • High Interest Rate
  • Higher Fees
  • Short Term
  • Extension Fees, if more time is needed.

Loan Amount
$150K+

Min. Rate
8.0% – 13.0%

Term Length
Up to 3 Years

Closing Time
2 – 4 Weeks

Max LTV
85% LTC

Amort.
Interest Only