203k mixed use buildings are a gold mine in Stockton

By
Home Inspector with 203kOnLine.com, covering the USA S0289

How about a mixed use building? I love this type property as in many cases it is very hard to get them financed. This is typically a commercial loan. The FHA Full 203k loan is perfect for a renovation project on a mixed use building. Let’s look at a couple of examples in “Small Town America” where you might see mixed use properties. I have actually had some Realtors and agents tell me that there weren’t any in their area NOT, they are everywhere in most towns all over the USA. They look like this:

 Mixed use building 1 by Mike Young 203k consultantMixed use building 2 by Mike Young 203k consultant

How about this one?

Mixed use building 3 by Mike Young 203k consultantThey are verywhere 

They are all around you, but YOU have to open your eyes and mind to see their full potential. They can be financed using the FHA 203k loan program. Now that you see these examples, don’t you remember seeing them in your town? Sure you do. Now you can sell these properties to.

Think of it, any of these properties can be financed using the FHA 203k loan program. Your buyer is looking for a place to put their business and a home to live in, this is the best of both worlds isn’t it? Sure it is.

We did one in SF that had a store under 5 units so we reconfigured the upper two floors to have 4 units and it was a 203k. On the surface you don’t always have a 203k potential property, so call me and we’ll talk you through it. You can always get a 203k consultant to look at it and do a “feasibility analysis”. I had another one in Berkeley CA that was a grocery store on the ground floor and three units on the second floor. As long as one of those units is owner occupied you are in business. The borrower doesn’t have to use the commercial space it can be rented to one of the occupants of the other units or a totally unrelated party.  Can you guess what cities these properties are located? Hint: 3 are in the same city and one is not.

Where else can you get 96.5% financing for a commercial building? I know when I was buying buildings like this we had to put 35% down in most cases. 3.5% down I could have purchased many more than I did. 

 

 

 

 

 

Uptown.

Posted by

Mike Young, 203k Team Leader    Mike ready for your 203k order

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Comments (9)

Gene Riemenschneider
Home Point Real Estate - Brentwood, CA
Turning Houses into Homes

Mike this is a great reminder and I am going to keep it in mind for small time investors that come looking for something.  Can they use the projected rents as part of the DTI?

Aug 08, 2012 02:18 PM
Mike Young
203kOnLine.com, covering the USA - Las Vegas, NV
FHA 203k Consultant 916-758-1809

Gene, they do get to count all the residential unit incomes at 75% to add to their other income, yes, the commerical income while being ignored, they do get to count the buidling area against other residential 2-4 unit buildings size so additinal value is generated there.

Aug 08, 2012 02:29 PM
Joe Petrowsky
Mortgage Consultant, Right Trac Financial Group, Inc. NMLS # 2709 - Manchester, CT
Your Mortgage Consultant for Life

You are right about the goldmine. If you understand how to use the 203 K product for mixed use properties, they can be a goldmine.

Aug 08, 2012 08:09 PM
Tom Arstingstall, General Contractor, Dry Rot, Water Damage Sacramento, El Dorado County - (916) 765-5366
Dry Rot and Water Damage www.tromlerconstruction.com Mobile - 916-765-5366 - Placerville, CA
General Contractor, Dry Rot and Water Damage

This sounds like an opportunity for agents to sell properties that they may not have thought of before. Couldn't hurt the contractors either Mike.

Great post!

Aug 08, 2012 11:12 PM
Eva Aliaga
Partnership Realty Inc - Boca Raton, FL
Boca Raton & Delray Beach: SE Florida Real Estate

Hi Mike, great idea on how to use a 203k to buy a mix use building. The 5 unit to 4 unit conversion was it done before purchase or done in plans to what plans were? As for the photos I would say Stockton getting name from title of post and other I would guess Manteca or Sacramento because near Stockton.

Aug 09, 2012 07:23 AM
Robert L. Brown
www.mrbrownsellsgr.com - Grand Rapids, MI
Grand Rapids Real Estate Bellabay Realty, West Mic

I didn't know you could use this on a commercial building. Good news to know.

Aug 09, 2012 10:41 AM
Mike Young
203kOnLine.com, covering the USA - Las Vegas, NV
FHA 203k Consultant 916-758-1809

Eva, all work on a 203k is done after it closes escrow. As the consultant we would actually draw it all up and give the borrower the concept and figure the cost to make the conversion so we loan enough money to get the job done and make the purchase. These are likle homeless people quite often we don't see them unless we are looking for them.

Robert, with commercial loans so hard to get these days this opens up a bunch of potential business. 

Thanks for both of your comments. We appreciate it

Aug 09, 2012 12:30 PM
Tom Arstingstall, General Contractor, Dry Rot, Water Damage Sacramento, El Dorado County - (916) 765-5366
Dry Rot and Water Damage www.tromlerconstruction.com Mobile - 916-765-5366 - Placerville, CA
General Contractor, Dry Rot and Water Damage

Glad to see that this was featured Mike, you bring up some very good points.

 

Aug 09, 2012 05:43 PM
Charles Stallions
Charles Stallions Real Estate Services - Pensacola, FL
800-309-3414 - Pensacola, Pace or Gulf Breeze, Fl.

I did not know this either and yes we have lots of them, blocks of vacant buildings with lofts and more attached.

Aug 10, 2012 12:46 PM