A mixed use property consists of both residential and commercial space.  This type of property is a great starter home for someone considering a future as a real estate investor.  If the plan is to finance a mixed use property, you can typically use residential financing, but need to do your research first.

Not all mixed use properties can be financed with a residential loan.  There are restrictions and unallowed properties, but with a little research and preparation, financing needs can be met.

For residential financing, the mixed use property must be a primary residence.  This is the first qualification that will knock some investors out.  If the goal is to purchase a mixed use property for a true investment, residential financing will not work.  In this scenario, commercial financing would be needed.

In addition to a primary residence, the business must be run by the mortgage client.  A typical scenario may be a doctors or dentist office.  The doctor resides in the residential unit and runs the practice in the commercial space.  There are may types of business this arrangement can work for, such as insurance agent, financial planner and many other business’.

If the client meets the above guidelines, we must make sure that the property is zoned residential.  If the property is zoned other than residential the financing for the property would need to be commercial or hard money.  In this case, it is easy to remember – it the property is zoned residential it is eligible for residential financing (if all other guidelines are met).

There are a few other guidelines to keep in mind.  If the mixed use property is going to be financed with an FHA mortgage, a minimum of 49% of the total square footage of the property would need to be residential (as opposed to commercial space).

A mixed use property can be a great piece of your overall real estate portfolio.