Is it commercial or is it residential?

[Eric Kristt]

So, I’m looking at a large house in my local area that has 5 units with 5 separate electricity meters. The MLS is marketing it as a multifamily residential property and was valued based on comparable homes. I was curious if banks or loan companies would still consider this residential, since its technically has 5 units? And if not, is it possible or beneficial to convert the house into a commercial property so I could raise the NOI and increase it’s overall value? Please help! Thank you

[Chris Mason]

Originally posted by @Eric Kristt:

I think it was zoned as residential but I’m not 100% sure. It is a house, just very large and split into 5 units. Does that matter though? Could I buy it as a residential and then zone it as commercial afterwards? Maybe that would be a great was to make money if they are just making a classification mistake...?

 It can be zoned residential, and for city/county purposes it may even be residential, but for financing purposes it's commercial. A kid can be grounded according to mom but not grounded according to dad, one of those things. Or if it's Europe in the 19th century it can be November in Russia and October in the UK, on the exact same day. This property is residential according to the city, but commercial according to mortgage lenders.