Change of Use Permit for CMX-1 property

[Marquise Lee]

I'm under contract on a cmx-1 building with 3 units. The top 2 units are residential and the first floor is in shell condition. The first floor is permitted for commercial/office use however I'd like to change it to a owner occupied residential unit. I believe with CMX-1 this would be a by right use, however I'm being told I'll need to get a change of use permit AND it may still get rejected.   I'm also being told the permit process may take 3-5 months.  Does this sound right?

I'm worried the lender won't approve the loan until the use permit is in place, and I'm certain the seller won't agree to wait 3-5 months. 

[Michael Enriquez]

Hi @Marquise Lee. You would need to complete a new use and registration. CMX-1 zonings are commercial on the first floor and residential above by right. In regards to using the entire property as a multifamily; Title 14, Section 602 of the zoning code reads:

"When the proposed use is in an attached or semi-detached building, the household living use regulations of the residential district to which it is attached apply. Otherwise, the residential use regulations of the most restrictive adjacent residential district apply. If there is no adjacent residential district, single-family household living shall be permitted and two-family and multi-family household living shall be prohibited."

How are you financing this property? Consider using a commercial lender as mixed-use wouldn't be an issue as far as approval.

[Marquise Lee]

Michael, I was hoping to do a 203k to renovate and occupy the first floor which is currently in shell condition.  Based on what you've showed, It doesn't look like I'll be able to get this done with a 203k unless the seller was willing to wait for the use permit to go through.  I've heard from several people that it would in fact take 4+ months and may still not get approved.  

If I were to go the commercial route...
1) what type of should I expect? Term, Rates, LTV maximums? Owner Occupied requirements?
2) is there a way to roll renovations into the loan?

Ultimately, I just want the property.  If residential doesn't work, I'd be fine with trying to get a commercial tenant.  Currently I could scrape together enough to put 25% down... If I had to (would rather not)... If I did I wouldn't be able to do repairs for a long while.  Another option I could investigate would be to pull equity out of another investment property I own that's currently at about 50% LTV.