Advice on a Mixed Use Property

[Joseph ODonovan]

Hello,

I am new to BiggerPockets and so far I find this site extremely valuable. I'm looking for some advice on a potential mixed used property (3 units) that I may make an offer on. Currently, I own 4 properties (1 condo, 1 duplex, 2 SFR). I have never owned a mixed use but I'm finding out it is not quite the same as a residential. For instance, since the ground floor unit is a store front, it's considered a commercial property even though the 2 upper units are residential. The financing options are more costly and insurance premiums seem to be higher. The cash flow on this property is attractive to me but I feel I'm missing something. What are some of the downsides to owning a mixed use? What about the appreciation, does it correspond to residential? Thanks in advance for any advice.

[Anthony Dooley]

Depreciation for tax purposes is different depending on which side produces more income. Appreciation will be based on NOI. Also, think about your exit. The future buyer will have the same concerns that you have and it may reduce your pool of buyers. Something to think about. Otherwise, if the numbers make sense, go for it and become an expert at it.