Business owners may obtain a mixed-use property using an owner-occupied commercial real estate loan, also referred to as an OOCER loan. This kind of loan is intended for people or businesses who intend to live in the property as well as use it as their primary place of business. In this article, we’ll go over the advantages of using an OOCER loan to buy a mixed-use property as well as how to go about doing it.

It’s crucial to first comprehend what a mixed-use property is. A building that combines residential and commercial uses is referred to as a mixed-use property. For instance, a mixed-use building might have apartments on the upper floors and a retail space on the first floor. Because it enables them to have both their residence and their business in the same location, this kind of property can be a great investment for a business owner. This can save them both time and money.

There are a few considerations to make when using an OOCER loan to buy a mixed-use property. The loan-to-value (LTV) ratio is the first factor to take into account. The loan amount in relation to the property’s value is known as the LTV ratio. The LTV ratio for an OOCER loan is typically between 75 and 80%, requiring a minimum down payment of 20 to 25 percent of the purchase price from the borrower. Although this sum of money may seem substantial, it’s important to remember that the interest rate will be lower the larger the down payment.

The borrower’s credit rating and income are the following factors to take into account. To assess the borrower’s ability to repay the loan, the lender will look at their income and credit score. To be eligible for an OOCER loan, you must have a good credit rating and sufficient income. The borrower might be required to make a larger down payment or pay a higher interest rate if they have a poor credit rating or low income.

The kind of property being purchased is a further crucial factor to take into account. The property’s condition and investment value will be important considerations for the lender. Additionally, the lender will look for signs that the property is in a desirable area and that there is a market for the particular kind of property being bought.

The lender will determine whether to approve the loan after looking at the borrower’s credit history, income, down payment, and property. The borrower will then be responsible for paying closing costs, which may include things like appraisal fees, title insurance, and legal costs, if the loan is approved.

There are many advantages to using an OOCER loan to buy a mixed-use property. One of the main advantages is that the business owner can combine their home and place of business, saving them both time and money. For the business owner, who can use the commercial space to make money while also living on the property, this can be a great investment. Additionally, the rental income from the residential units on mixed-use properties can be a fantastic way to make extra money.

The ability of the business owner to deduct the interest paid on the loan from their taxes is another advantage of using an OOCER loan to buy a mixed-use property. The total cost of the loan may be lowered as a result, saving the business owner money.

The local zoning laws must also be taken into account when using an OOCER loan to buy a mixed-use property. It’s crucial to confirm that the property is zoned for both commercial and residential use, and that the owner’s intended use of the space complies with applicable regulations. It’s always a good idea to speak with a local real estate agent or attorney before buying a property to confirm that the property is zoned for the intended use and that all required permits can be obtained.

In conclusion, a business owner may make a wise investment if they use an OOCER loan to buy a mixed-use property. They can save time and money by being able to conduct business and live in the same place. Additionally, the rental income from the residential units on mixed-use properties can be a fantastic way to make extra money. Before submitting an application for an OOCER loan to buy a mixed-use property, it’s important to take the LTV ratio, the borrower’s credit score and income, the type of property and zoning regulations into account. Business owners can make an informed choice and improve their chances of getting an OOCER loan by keeping these factors in mind.

F2H Capital Group is a debt advisory firm specializing in negotiating the best terms for your commercial real estate projects. The company offers a range of financial products and services, including fixed loans, bridge loans, and construction loans across all asset types. Please contact us for any of your financing needs.