Finanincing a Mixed Use Shell in Philadelphia

[Marq Lee]

So I'm looking to secure financing on 3 story mixed-use building in Philadelphia. The asking price for the building is 98K but I'm sure I can get the seller down to 85-90K. I'm able to put 25K down.

The ground floor is a commercial retail space, with a large apartment on the 2 & 3rd floor. Both units are essentially in shell condition. In addition, I would like to roll 20K into the loan in order to rehab one of the two units.

My first option would be to rehab the commercial space and get a tenant in there to cover the mortgage while I slowly renovate the space upstairs into my dream apartment, which I would move into upon completion.

My second option would be to focus on the apartment first spend a bit more money to get it ready much sooner. If I do it this way, I can rent out my current home which would easily offset any losses from the empty commercial space.



Which option works best for financing? Can I get a commercial loan w/o a tenant lined up for the commercial space? If I plan on living in the apartment sooner than later will the fact that it's Owner-Occupied help or hinder me?

[Max T.]

I think FHA will only fly on mixed use if you plan on living there and running your business out of the commercial space. They will want you to prove your business via tax returns. Furthermore, I know that there are tons of these properties available in philly. Part of the reason is that, aside from some blocks in some neighborhoods, these commercial spaces are very difficult to rent. With that being said, if you are able to get financing, I would focus on getting the apartment ready first. At least then you can get some rent coming in while you worry about the commercial space.