Financing Owner-occupied Condos in Mixed-use Development Project

[Josh H.]

I'm working with some partners on the development of a property we own in WA state.  The plan is to construct a mixed-use building (retail, office, housing), and there are a few partners who actually want to own units and live in the building too.

Could the LLC we use to develop the property seller finance the individual condos (on a land contract) back to the partners? The individual partners would then pay the LLC each month per the terms of their contracts, and the LLC would in turn use those funds to pay down the permanent commercial loan on the building. And if so, how would this arrangement play into the underwriting of the commercial loan?

Is there a better or more common way to go about this?  If so, I would love to hear your thoughts or experiences.  Thank you!