Mixed-use Re-fi Questions in Phoebus (Hampton) VA

5 Replies

Hello (Virginia) BP Nation,

We need your help... Please.

Without getting to far into the weeds, We've recently purchased a little Mixed-use building in downtown Phoebus (Hampton) VA.

It’s a cute little wreck, and will need EVERYTHING, including infrastructure.

A complete gut job. It’s appx. 1600 sf with an 800 sf commercial unit downstairs and 2BR unit upstairs. (See below if I can figure out how to load some pics)
We know that many will (would) say; “tear it down and start new” but, we’d like to make that another discussion.
Our initial strategy is to BRRR it, and hopefully create some equity and cash flow on the back end. We've done this a few times now, but always in the commercial (5+ unit) residential market and this will be our first foray into the Mixed-use and/or straight out commercial market.
Now, I remember a conversation we had with my brother-in-law (a commercial banker in NY) when he told us these were the most difficult properties to get financing for, or were, at that time (this was some years ago). And yes, we will be consulting him too,
but we want your input...please.

So, for any of you having knowledge about these properties, or this process, our questions follow:

First, in your experience, is what my brother said as true today as it was some years ago? Or was that just a local trend at a specific time?

Next, what underwriting criteria do we need to watch out (or plan) for, or have the largest impact on a re-fi of this nature? (IE: deal make-or-breakers)

Finally, any input you have on this process? What would you advise us to do/not do, or plan for?

Thanks in advance, we very much appreciate the collective intellect!

Scott Sewell

Anchorage Rental LLC


Hey @Scott Sewell , I have seen and had my own troubles with getting funding on mixed use because of the risk factors they POTENTIALLY offer to the property. The lender and or insurance company sees 2 or more types of individuals passing into the same property. Main concerned is it could result in someone from the business audience causing damage to the residential unit on the property, followed by the vice versa. The business is normally valued higher and could be help liable for those damages meaning bigger risk of a payout (insurance) or loss of use of the property (lender). These are obviously extremes but that is how they see it unfortunately (generally speaking). If you do find a lender for the property let me know if you need someone to get you insurance on the mixed use. I had a carrier that will absolutely take this one and help you present it to your lender that you can get insurance on the mixed use property. 

Feel free to reach out I hope I can or did help a bit. GOOD LUCK SIR!

Thanks Guys, (David and Max)
@Maxwell Fontaine , that was helpful. And thanks for the recommendation, we'll keep it in mind.

So, since we plan to rehab the entire structure, would it be your advise to change the use of the residential space? To an office space possibly? Or should we be consulting with a commercial lender(s) about their underwriting criteria before we finalize our plans and start pulling permits?

@David Nacco ,

You might have been the smarter man David. We've already had our challenges with this place. The old owner was running the upstairs unit as an illegal rooming house, you can imagine the condition of what we walked in to....

Originally posted by @Scott Sewell :

Thanks Guys, (David and Max)
@Maxwell Fontaine , that was helpful. And thanks for the recommendation, we'll keep it in mind.

So, since we plan to rehab the entire structure, would it be your advise to change the use of the residential space? To an office space possibly? Or should we be consulting with a commercial lender(s) about their underwriting criteria before we finalize our plans and start pulling permits?

What I planned to do with it was split the downstairs commercial space into 2 studio apartments.