Mixed-Use Property Bridge Loans for Storefront and Apartment Buildings

Why mixed-use buildings fall between lending programs

A mixed-use building is two businesses under one roof. The apartments behave like residential real estate: many small leases, steady demand and turnover every year or two. The commercial space behaves like retail or office: fewer, larger leases, longer vacancies between tenants and income that depends on one or two businesses. Residential lenders often limit how much of a building's income or space can be commercial, while commercial lenders may not want to underwrite a handful of apartments. The result is that a perfectly good main-street building can be hard to finance, especially when the storefront is empty or the leases are short.

Our bridge loans are built for exactly that situation. We look at the building as a whole, value each income stream on its own terms and lend against a realistic plan to get the property to the point where a long-term lender will take it.

Common mixed-use bridge loan scenarios

• Vacant ground floor. The apartments are leased but the storefront is dark. A bridge loan carries the building while you lease the commercial space, often the single biggest driver of value.
• Purchase from a long-time owner. Below-market residential rents, month-to-month commercial tenants and deferred maintenance are typical when a building changes hands after decades.
• Renovation and repositioning. Updating apartments, splitting or combining storefronts, or converting upper-floor office space to residential where zoning allows.
• Owner-user turned investor. A business owner moved out of the ground floor and the building now needs to be leased and financed as an investment property.
• Refinance or cash-out. Paying off a maturing loan or pulling equity for improvements when a bank will not count the commercial income.
• Quick-close purchases. Estate sales, partnership breakups and auction deadlines where timing matters more than a perfect rate.

How we underwrite a mixed-use property

• Income by component. We separate residential and commercial income and look at each: unit rents against the market, and commercial rent per square foot against comparable storefronts or offices.
• Commercial lease terms. Remaining term, renewal options, rent steps, who pays taxes, insurance and common charges, and whether the tenant is a long-standing local business or a recent arrival.
• Ground-floor use and tenant mix. A restaurant, a medical office and a convenience store carry different risks, build-out costs and re-leasing timelines. We consider what the space is best suited for if it goes vacant.
• Residential occupancy and rent roll. Unit count, current rents, lease expirations and collections, the same way we would review a small apartment building.
• Zoning and legal use. Whether the current mix of uses is permitted, legally nonconforming or in need of approvals, especially for conversions or added units.
• Building systems and separation. Separate meters, fire separation between commercial and residential space, venting for food uses and accessibility for the storefront.
• The exit. Which long-term lender will take the building once it is leased, and what that lender will require: occupancy, lease terms and the share of income coming from commercial space.

Paperwork stays limited, valuation is handled in-house or with a broker price opinion (BPO) with no full appraisal, and there is no minimum credit score.

Mixed-use bridge loan parameters

• Loan size: $100,000 to $2,000,000; smaller loans, and larger loans up to $5,000,000, are considered case by case
• Leverage: up to 70% LTV / LTC, first lien
• Rate: 10.99% to 12.99% (current typical range; subject to change, market conditions and underwriting)
• Origination: 2 to 4 points
• Term: 12 months, plus one optional 6-month extension
• Payments: interest-only; flexible prepayment
• Purchase down payment: typically 20% to 50%
• Term sheet: typically within 24 hours of intake review

All terms are indicative and subject to underwriting, valuation and diligence. Not a commitment to lend.

Mixed-use properties we finance

• Storefront with apartments above
• Main-street and corner buildings
• Restaurant or bar with upper-floor units
• Ground-floor office or medical with apartments
• Multi-storefront buildings with residential
• Rowhouse conversions with a commercial ground floor
• Buildings with vacant or owner-vacated storefronts
• Upper-floor office-to-residential conversions

We lend in Washington DC, Maryland, Virginia, Delaware, Pennsylvania and New Jersey across the Mid-Atlantic, and in North Carolina, where traditional main-street and rowhouse mixed-use buildings make up a large share of small-balance commercial deals.

Leasing the storefront: plan the exit before you close

Most mixed-use bridge loans are repaid by refinancing into long-term bank or investor financing once the building is leased, or by a sale. The ground floor usually decides how smoothly that goes. Before closing, think through the realistic time to sign a commercial tenant, the build-out or allowance a tenant will expect, and how long the new lease needs to be in place before a permanent lender will count it. A plan with enough time for leasing, build-out and a few months of collected rent is far easier to refinance than one that assumes a tenant signs on day one. With a term of 12 months, plus one optional 6-month extension, we will talk through that timeline during the review.

Submit a mixed-use deal

Start the commercial loan application and choose Mixed-use; it asks for the residential unit count, commercial square footage, occupancy of each component, tenants and rents. Brokers can submit through our Broker Program. Related reading: multifamily bridge loans for all-residential buildings of five or more units, retail and restaurant loans for all-commercial buildings, and small balance commercial loans.