A shop on the ground floor and apartments upstairs is two businesses in one building. In Austin, where corridors like East 6th, South Congress and Burnet Road mix both, the loan has to understand each income stream on its own before it adds them together.
In short: LendingStreet finances investor-owned mixed-use buildings in the Austin metro, including retail or office below with apartments above and live-work buildings, for purchase, refinance and bridge. Loans are sized on blended NOI from the commercial and residential income, with up to 75% LTV on acquisitions and custom terms up to $5M+. The commercial share, lease terms and vacancy assumptions all affect how much the building can borrow.
Older mixed-use stock in Austin tends to line the historic commercial streets: East 6th Street, East Cesar Chavez, Manor Road, South Congress and South 1st. Newer vertical mixed-use buildings, with apartments over ground-floor retail or office, have gone up along corridors such as Burnet Road, North Lamar, South Lamar and East Riverside, and in planned areas like Mueller and the Domain.
Outside the city, downtown squares in Georgetown, Round Rock, San Marcos and Lockhart have two-story buildings with storefronts below and apartments or offices above. These smaller buildings often fit our small-balance program.
The City of Austin has used a Vertical Mixed Use (VMU) overlay on many corridor properties since the mid-2000s, and the City Council later added a VMU2 option allowing more height in exchange for affordable units. Other parcels carry a mixed-use combining district on top of their base commercial zoning.
For a loan, the zoning matters because it decides whether the current use is legal and whether the building could be rebuilt as is after a loss. Ask for a zoning verification or check the property profile with the City of Austin Development Services Department, and confirm suburban zoning with the relevant city.
We underwrite the commercial and residential sides separately, then add them. The apartments are judged on market rents, turnover and concessions. The storefronts are judged on lease terms, how long each tenant has left, who pays taxes and maintenance, and how long a space might sit empty if a tenant leaves.
Because ground-floor retail and office usually carry more vacancy risk than apartments, underwriting typically applies a higher vacancy assumption to the commercial share. A building where most of the income comes from apartments generally sizes more easily than one that relies on a single large storefront.
This example is illustrative and not a quote. An investor is buying a two-story building on an East Austin corridor at an assumed value of $1,850,000. Two ground-floor retail spaces bring in $90,000 a year and six apartments bring in $114,000. Underwriting applies 10% vacancy to the retail and 6% to the apartments, for effective gross income of $188,160.
After taxes, insurance, repairs, shared utilities, management and reserves, NOI is $141,660. At 70% LTV the loan is $1,295,000 with estimated annual debt service of $112,324, for a DSCR of about 1.26x. If one storefront were vacant at closing, the building would likely be sized lower or start on a bridge loan.
| Line | Amount |
|---|---|
| Retail rent, two ground-floor spaces | $90,000 |
| Apartment rent, six units | $114,000 |
| Retail vacancy at 10% (assumed) | -$9,000 |
| Apartment vacancy at 6% (assumed) | -$6,840 |
| Effective gross income | $188,160 |
| Property taxes (assumed) | -$27,500 |
| Insurance (assumed) | -$7,800 |
| Repairs, utilities, management and reserves (assumed) | -$11,200 |
| Net operating income (NOI) | $141,660 |
| Value (assumed) | $1,850,000 |
| Loan amount at 70% LTV | $1,295,000 |
| Estimated annual debt service | $112,324 |
| DSCR | 1.26x |
A stabilized building with signed commercial leases and full apartments can go straight to a permanent purchase or refinance loan. A building with a vacant storefront, below-market apartments or a renovation plan is usually a better fit for a commercial bridge loan, with a planned exit to permanent financing once the income is in place.
For an owner who has held a stabilized mixed-use building for years, a cash-out refinance can pull equity based on current NOI, subject to the same coverage test.
Property taxes in Texas are high and set locally through the appraisal district, and a sale often resets the value. Owners can protest appraised values each year, so check the current record with the Travis, Williamson or Hays central appraisal district. Commercial leases may pass some of those taxes through to tenants, which helps NOI only if the lease actually says so.
Insurance for a building with restaurant or retail use can cost more than for apartments alone, and hail exposure applies across Central Texas. Get a quote that covers both uses before you finalize your numbers, and ask whether any commercial tenant is required to carry its own coverage under its lease.
Mixed-use loans take longer than residential loans. Expect a full valuation, a review of every commercial lease, and often environmental and property condition reports, especially if a past tenant was a dry cleaner, auto shop or similar use. Texas is a non-disclosure state, so comparable sales can be harder to verify.
Our investor loans are business-purpose loans on non-owner-occupied property. If you will run your own business out of the storefront, this is not the right program. For investor-owned buildings, send the address, rent roll and leases through the form below or call (877) 298-1001, and we will show you how the blended income sizes before you spend money on reports.
A commercial loan on a building that combines commercial space, such as retail or office, with apartments. It is sized on the blended NOI of both uses.
Yes. Commercial space usually carries more vacancy risk, so a higher commercial share often means a more conservative vacancy assumption and a smaller loan.
Small mixed-use buildings can fall under different programs depending on unit count and income mix. Tell us the layout and we will tell you which program fits.
Vertical Mixed Use is a City of Austin overlay used on many corridor properties that allows apartments above ground-floor commercial space. Confirm a property's zoning with the city before you buy.
Often yes, but usually through a commercial bridge loan first. Permanent loans want the income stabilized.
Yes. Short remaining terms, below-market rents or unclear expense responsibilities can lower the income we count.
Often. Past uses such as dry cleaning or auto repair are common reasons for a closer environmental review on mixed-use property.
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