Mixed commercial + residential vs residential

Allentown, Pennsylvania
Multi-Family and Apartment Investing
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Mixed commercial + residential vs residential

Mark Bennett
Member since 2025 · 2 posts · 8 votes

Hi, curious if anyone has experience or insight on purchasing a mixed-use multifamily (ie: 1 business + 2 residential apartments) vs let's say a purely residential triplex. I'm looking for my first investment property with cash flow as the main objective and had not considered mixed use properties until I stumbled across a few interesting ones recently. 

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  • Denver McClurePro Member
    Financial Advisor · Flower Mound, TX · Member since 2018 · 661 posts · 480 votes
    1y

    Hey @Mark Bennett, feel free to PM me. We have experience in both types of deals.

    [email protected]
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  • Nicholas Mann
    Valhalla, NY · Member since 2013 · 132 posts · 84 votes
    1y

    Hey Mark, I have purchased 2 mixed use properties similar to the one you mentioned. Make sure wherever you are purchasing this is in a good location (downtown area) as some stand alone mixed use properties can be awkward and if the commercial space is not in a great location you may have some extended vacancies. Financing will most likely be viewed as commercial but you should be able to get a DSCR loan at a slightly higher rate that purely multifamily. Feel free to reach out for any other questions.

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  • Robert Rixer
    Investor · Miami, FL · Member since 2015 · 355 posts · 268 votes
    1y

    It comes down to how easily you can get the ground floor retail leased, if it's not already. With mixed-use the cap rate to apply usually comes down to where the majority of the income comes from, the retail or the residential. With only 2 units it may be more 50/50. The retail should trade at a higher cap rate than multifamily so you want to make sure you aren't paying multi cap rates.

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  • Ryan RomingerBusiness Member
    Real Estate Broker · Indianapolis, IN · Member since 2018 · 340 posts · 144 votes
    1y

    Hey! Mixed-use can be a solid option depending on the area—commercial tenants tend to stay longer and often handle more of their own maintenance, but financing and vacancy risk can be a bit trickier compared to a standard triplex. I’ve seen both work well, just really comes down to the local demand for that commercial space. Worth exploring if the numbers pencil out and the business side has good potential!

    [email protected]317-935-0075
    Intrigue Real Estate & Property Management4.6272 Reviews
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  • Ko KashiwagiPro Member
    Lender · Los Angeles, CA · Member since 2022 · 967 posts · 445 votes
    1y

    Hi Mark,

    I've seen great arbitrage taken advantage of by investors to get much better cashflow with commercial leases than residential and commercial tenants tend to have long leases with sometimes less hassle (NNN).

    In my opinion financing the property is more difficult for mixes use especially if the loan amount is sub 500k-1M because there's limited options but if it's for example over 1M you could get really good rates if the NOI is there and bank financing if available.

    310-848-9776
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  • Kyle Vogeler
    Rental Property Investor · Emmaus, PA · Member since 2021 · 154 posts · 85 votes
    1y

    I would say that it mostly depends on the location. A mixed used building in downtown or center city could be very appealing. Getting a nice restaurant, coffee shop, laundromat, or boutique to move in beneath your apartments would add attractions for your tenants. 

    Where as a mixed-use in a rural area that has apartments next to or on top of a garage is significantly less appealing. The garage adds little value to your tenants and actually probably lowers the amount of rent you can get from the apartments.

    Each deal is unique and there may be great garage/apartment deals that you stumble upon, but for the most part I would take what I said above into consideration before purchasing this type of asset. 

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  • Matthew MorrowBusiness Member
    Investor · PA - NY - NJ · Member since 2019 · 936 posts · 340 votes
    1y
    Quote from @Mark Bennett:

    Hi, curious if anyone has experience or insight on purchasing a mixed-use multifamily (ie: 1 business + 2 residential apartments) vs let's say a purely residential triplex. I'm looking for my first investment property with cash flow as the main objective and had not considered mixed use properties until I stumbled across a few interesting ones recently. 

     Hey @Mark Bennett-  most of my portfolio is mixed-use properties around the Lehigh Valley. They can be great cash flow plays, especially when the commercial side is stable, but there are definitely some local curveballs to watch out for with zoning and lending.

    Happy to talk through what I’ve seen work (and not work) if you’re seriously looking at one. Feel free to shoot me a message anytime.

    [email protected]484-791-6200
    CORE Team | Realty ONE Group Supreme548 Reviews
    WebsiteView Page
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