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MFman67 · Joined: 09 Jul 2009 Posts: 6 3.30 Dollars($)

Say I am looking at a 2 story mixed use property. Imagine it has 3 storefronts as the bottom half and a single 3 bed apt above, plus office space next to it, as the top half.

As it stands there is more commercial space than residential but if one was to convert the top office space to another residential unit (provided it was allowed with the town and zoning) there would be more residential space and footage.

Could this financing be used to make the conversion of office space to an additional unit or would it need to first be converted before this financing is allowed?

Additionally, is there any type of zoning that is not allowed for this program?

For example, I own what is often considered as a mixed use property but it is zoned commercial. It has a small separate single story storefront as well as a detached two story 2 family home. This is one lot, one deed, one property. The boiler is shared amongst the two structures but the buildings themselves are detached. The sq footage of the house far exceeds the store. Would this property be able to use this financing?

Sorry for the length, appreciate the replies.

gmakerley · Posted: Thu May 26, 2011 12:36 pm Post subject:

I used to have this at my fingertips, but no longer.

I surmise (and this is based on 18 months ago and my best recollection) that the first piece you're mentioning would not be suitable for a 203K. Zoning isn't necessarily key in making such a determination - it's what the FHA requires.

The existing property you noted might bring you some startlingly odd comments - you may already have heard them though. Whenever you have a property on which there are two structures, you're going to have difficulty in obtaining financing, because there are only so many such unusual properties, and appraisers have a very difficult time doing comparables and in reaching a reasonable market value. Lenders are, of course, that much more skeptical in the review of an appraisal for mixed-use property.

I hope someone else stumbles upon this post so as to give you a better handle on things than I have. I'm not lending anymore, so my reference material is based on best recollection rather than by the book.

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FHA 203k rehab questions (expert needed)

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