Which way to buy a mixed use property

[Colleen Fiumara]

I am buying a small run down cottage listed on the town field card as a residential single family, but completely covered in red for commercial zone on the town's zoning map, it backs up to a grocery store and is across from a bank.  I got a great deal so I took and it an got under agreement. Now I'm all over the place for use.  I want to potentially renovate into a small office for my company, or I could rehab and rent, it would be a cute 2bd/1bth rental.  I am torn on how to renovate depending on what I'll do with it, I don't want to commit to straight office by removing the shower for example in case at some point I want to rent it as a house. I need to choose a focus.  (either way it's a low budget DIY renovate over time situation, I can't spend too much on the house because it will eventually be a tear down). The lot/location will be worth something for a rebuild some day.

Secondly, trying to figure out the best way to borrow for this. 

• Just use it as a home office. Primary home Residential loan would be a great rate and less down but may cause a problem for a future underwriter if I see a multifamily in a few months and want to buy that as my primary/owner occupied 2 family for example. I say this because that is my next purchase, I'm actively looking. My lender said it would be hard to show going from a single family primary to a multi primary. (My question: can I simply show my intent has changed from home office to full office and now I need a home?)

• Investment property loan is more down, higher interest but leaves me open to purchase a (higher priced, low down payment) primary soon.  I have the money saved to make the higher down payment on the little cottage but it's close to all of what I had set aside to purchase and light reno so it would be tight. But I also figured I'd just be moving my money from low yield mutual fund savings into the real estate (still good investment but no longer liquid) and in this current health emergency situation that is risky. I am a real estate broker and currently have transactions closing but will I in a couple months? (Something to consider - can I refill that savings)
  

• My third lending option would be a commercial loan buy it as I see it as an office building conversion, it's in the right location, what benefit would it be to go with a commercial loan now? One option is to go full commercial, knock down the cottage and build a small retail strip for lease. (I'd ask my zoning officer first of course the rules, etc) I do have 200 ft of frontage and I'm in the commercial zone.

I have no primary now and I own one rental property from many years ago that will have no interference.

I appreciate you reading this far and any advice you can give is greatly appreciated.  I've talked to a few lenders, agents, investors but I really knew I would get some great advice in this group.