Mixed use hard money loans are a type of borrowing instrument utilized by those wishing to invest in commercial and residential properties for money-making purposes. An example of a mixed use property is an apartment building with stores on the bottom floor or a church with a school. These loans are usually provided via private lenders like Saxe Mortgage, rather than via banks and mortgage companies. The interest and pay back terms may be a bit higher and shorter than traditional lenders as far as level of interest rate and number of years required to pay off the balance.
For example, banks may provide money for mixed use purposes for 6-8%, while private hard money mixed use lenders may ask for 9-14% interest. These types of mixed use loans are not meant to be long term loans, although terms as long as 5 years out can be obtained. Rather these types of mixed use hard money loans are also at times called bridge loans, and are for investors needing cash right away for the short term.
One example of mixed use hard money loans is for investors buying apartment buildings which will be rehabbed and then put right back onto the market and sold for a profit. The borrower is only interested in obtaining the cash to purchase and flip the property, hopefully selling it off before the terms of the mixed use loan becomes due. Some investors will want to buy vacant land or commercial property that will be used for a variety of reasons: retail, storage, health, etc. These types of investments are considered to be non-conforming and are more suitable for mixed use private or mixed use hard money lenders.
Mixed use hard money loan lenders are interested in getting their cash back with the interest, and therefore if something can be worked out with borrowers who have experienced bankruptcies, foreclosures, difficulty in coming up with down payments, self-employed situations, etc. then they will go ahead with the deal. As long as the lender thinks they can get their investment back out of the property plus interest, then then there is a good chance for obtaining the mixed use hard money loan. The process is extremely easy, and in most cases, the borrower can get the funds in less than 7 days.
For investors interested in new construction, mixed use hard money loans can be the solution. The funds are usually put into an escrow account to be used as needed in the form of draws as the construction is completed stage by stage. A mixed use bridge loan may not work here, because if the property being built is a large apartment complex, most likely it will take two to three years to complete all the phases, and most bridge loans are for no longer than two years. Therefore, a lending instrument will need to be obtained that will be sure to cover all the months of build out needed for the project.
There are mixed use hard money loans provided by lenders like Saxe Mortgage who specialize in lending to investors wishing to borrow large amounts of money, even into the millions of dollars for commercial uses such as building assisted living centers, medical centers, storage facilities and entertainment parks. These lenders are interested in the loan to value ratio, searching for equity in property generally not above 70%. That is, the borrowed amount will not be greater than 70% of the worth of the property. In all cases, the lender is interested in understanding how the borrower plans to pay back the loan. The client needs to have all of that figured out at the time the loan is taken out. The lender does not want to take back the property.
Mixed use hard money loans lenders may request that an appraisal of the property be conducted as part of the process of approving a loan of this type, because they are making lending decisions based on the value of the property in question. This is why they can by-pass all the traditional lender paperwork requests required in putting together traditional mortgages. This is also why the loan can be put together in a relatively short period of time, which is ideal for people who need to cash quickly to close on an investment.