How mixed-use building financing is structured
Mixed-use buildings make lenders nervous when the story is vague. Ground-floor retail and apartments above are not one income stream. Kelly Dutton arranges mixed-use financing at OneClick Commercial Funding by separating those pieces before a lender does it for you.
Two incomes, one loan
Residential rents are usually steadier. Retail rents depend on the tenant, the lease term, and whether the space is vacant. A lender may count the apartments fully and haircut the retail, or refuse the retail income until a lease is signed. If you underwrote the purchase on 100 percent of both, the loan amount will come in lower.
Show each unit and each storefront on the rent roll. A blended “building income” line is not enough. The same document checklist used on other commercial files applies here, with both lease types attached.
Which program the building actually fits
If the residential share dominates, the file may be reviewed like a multifamily loan, and DSCR becomes the test. If you occupy the commercial space for your own business, an SBA loan may fit better than an investment-property product. Read owner-occupied versus investment property before you assume one lane.
The Urban Land Institute publishes how mixed-use projects are planned and financed. Local lenders still underwrite the leases in this building, not a national case study.
Parking, access, and the vacant bay
In Phoenix, parking and street access decide whether the retail bay is leasable. A vacant bay is not a rounding error. Tell Kelly it is vacant and what rent you are using. Inflated pro forma rent on an empty storefront is the fastest way to lose a term sheet.
Construction of a new mixed-use project is a different loan. Draws and the takeout are covered in how ground-up construction loan draws work.
What this is not
This is not a commitment to lend. Loan terms, amounts, and rates are not guaranteed. Every file still goes through lender approval, credit review, and underwriting.
About the author
Kelly Dutton is a senior commercial mortgage broker at OneClick Commercial Funding in Phoenix. She arranges financing for business owners and real estate investors. She is a broker, not a lender. Read more on the About Kelly Dutton page.
Next step
Call (480) 363-1412 or visit kelly-dutton.com to request a financing call with Kelly Dutton at OneClick Commercial Funding.