Percent Down For This Deal?

Question

For my first REI, I am considering an off-market mixed-use building in a great/solid area. Lower level is a bar (has been operating for decades) and upper level is a three-bedroom occupied rental apartment. The seller is asking 500K for the building, and since the seller is also the operator of the bar, this asking price includes the sale of that business. The cash flow overall on this property seems great, mostly due to the bar although certainly I would ask for P&Ls to verify. Anyway, if all checks out, I would want to put 10% down on a conventional 30-year fixed rate loan. I have good financials -- I am employed, have excellent credit, have 90%+ equity in my primary residence, and have a significant chunk of money in the stock market. However, I have no idea whether a bank would require significantly more down on a mixed-use property like this. [Note: to answer the question in advance as to why I want to put down 10% if I have the assets to put down 20%, the answer is that I would not need to sell any stock to put 10% down, but I would have to do so in order to put down 20% and would rather not sell]. Thx in advance for any insight.

Jon Holdman · Answer

Mixed use will require commercial financing.  30 year fixed rate is rarely available for such loans.  30 year fixed is available for conventional loans for 1-4 unit residential properties.  The bare minimum, other than for FHA is 15% down on a single family with conventional.  Even 20% down would be good for a mixed use property like this.   There are some "small balance" commercial loans from Freddie Mac, but small balance is usually $1million.  You're really in kind of a no mans land with this deal.  Your best option for financing this is the seller.