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Updated 10 months ago on . Most recent reply

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Ryan Daulton
  • New to Real Estate
  • Princeton, TX
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Residential versus commercial

Ryan Daulton
  • New to Real Estate
  • Princeton, TX
Posted

What is the exact criteria for residential versus commercial properties. My understanding is that residential is anywhere from 1 to 4 units. But what if some units have more than one room in them and I rent out each room two separate tenants? For example if I bought a duplex that had two bedrooms and one unit and three in the other for a total of five bedrooms... If I rent out each room to a different tenant would that make it a commercial property?

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Erik Estrada
#3 Mortgage Brokers & Lenders Contributor
  • Lender
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Erik Estrada
#3 Mortgage Brokers & Lenders Contributor
  • Lender
Replied

It depends on the zoning. If it is zoned SFR, Duplex, Triplex, Quadplex it is considered residential from a lending standpoint. If it is zoned 5+ MFH, Mixed Use, and other commercial uses, then we would look at it as a commercial property.

You just described a rent by the room which would not classify a duplex as a commercial property. It is still considered residential since it is zoned as a duplex. 

Now if there is a bar, restaurant, retail, or other commercial use and its legal, then it could be considered commercial from a lending standpoint.  

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