A two-story building on Magnolia Avenue with a restaurant downstairs and apartments upstairs earns money two different ways. Lenders underwrite those two income streams differently, and the mix between them shapes how much you can borrow.
In short: LendingStreet finances Fort Worth mixed-use buildings, such as retail or office on the ground floor with apartments above, for investors buying, refinancing or repositioning them. Loans are sized on blended NOI from the commercial and residential space, with custom terms up to $5M+ and up to 75% LTV on acquisitions. The commercial share, lease terms and vacancy assumptions all affect the final loan amount.
For our purposes, mixed-use means a building that combines commercial space, like a storefront, restaurant or small office, with residential units. Live-work buildings, where units are designed for both living and business use, fall here as well. The tenants run the businesses and live in the units; you own the building as an investment.
Our investor loans are business-purpose loans on non-owner-occupied property. If you plan to run your own business in the storefront, that is an owner-user situation, and it is not what these loans cover.
The Near Southside is the clearest example. Magnolia Avenue and the streets around it have older storefronts, restaurants and newer buildings with apartments over retail, close to the Medical District. Downtown edges and the West 7th area have larger, newer mixed-use projects, and Camp Bowie Boulevard has older storefront blocks where some buildings carry offices or apartments upstairs.
Smaller mixed-use buildings also appear along older commercial streets near TCU and in the historic neighborhoods south and east of downtown. Each of these blocks has its own retail tenant base, so the commercial leases need to be read on their own terms.
The City of Fort Worth has Low Intensity Mixed-Use (MU-1) and High Intensity Mixed-Use (MU-2) zoning districts, plus form-based districts in areas such as the Near Southside and Berry/University that set standards for building form and uses. Older buildings may also be legal nonconforming uses under current rules.
Zoning matters for the loan because the appraisal and underwriting assume the current use can continue. Ask for a zoning verification or check the city's zoning map and Development Services, and confirm that the residential units upstairs are permitted and legally occupied.
Underwriting splits the rent roll into commercial and residential pieces. Apartments upstairs usually turn over on 12-month leases and are underwritten with a residential vacancy assumption. Storefronts and offices are underwritten on their actual leases: the term remaining, renewal options, who pays taxes and insurance, and how long the space would likely sit empty if the tenant left.
The larger the commercial share of income, the more those lease details matter. A building whose income is mostly apartments with one small shop looks a lot like multifamily. A building where two retail leases carry nearly half the rent depends on those two tenants.
This example is illustrative and not a quote. Rents, vacancy and expenses are assumptions for the math, not Fort Worth market data.
An investor buys a building with two ground-floor retail spaces and six apartments for $1,850,000. Retail rent is $86,400 a year and apartment rent is $104,400, so the commercial share is about 45.3% of gross income. Underwriting applies an assumed 10% vacancy to the retail and 5% to the apartments, for effective income of $176,940. After $33,000 in taxes, $11,500 in insurance and $22,000 in other operating costs, NOI is $110,440.
At a 1.25x DSCR target the loan is $1,015,000, with estimated annual debt service of $88,038, DSCR of 1.25x and LTV of 54.9%. If one storefront were vacant at closing and underwritten with no income, NOI would fall to $71,560 and the loan would shrink to $660,000, about 35.7% LTV, at the same 1.25x coverage.
| Item | Both storefronts leased | One storefront vacant |
|---|---|---|
| Purchase price | $1,850,000 | $1,850,000 |
| Retail rent, annual | $86,400 | $43,200 |
| Apartment rent, annual | $104,400 | $104,400 |
| Effective income | $176,940 | $138,060 |
| Taxes, insurance and other costs | $66,500 | $66,500 |
| NOI | $110,440 | $71,560 |
| Loan amount | $1,015,000 | $660,000 |
| Estimated annual debt service | $88,038 | $57,246 |
| DSCR | 1.25x | 1.25x |
| LTV | 54.9% | 35.7% |
A stabilized building with leased storefronts and occupied apartments fits a permanent purchase or refinance loan. A building with an empty storefront, apartments that need renovation, or a plan to convert upper-floor space may fit a commercial bridge loan first. Bridge loans are short-term and interest-only, and the plan is to refinance into a permanent loan or sell once the building is leased.
For a stabilized building you already own, a cash-out refinance can pull equity out, sized on current NOI and DSCR.
Mixed-use buildings in Fort Worth are taxed on the appraisal district's value, with rates set by the city, county, school district and other taxing units. Owners can protest that value each year. Budget on a realistic post-sale figure rather than the seller's bill.
Insurance for a building with a restaurant tenant, older wiring or a flat roof can cost more than you expect, and hail and wind deductibles matter in North Texas. Because Texas is a non-disclosure state, sale prices are not public, so mixed-use comps can be hard to find and the appraiser may lean on the income approach.
Mixed-use loans take longer than residential loans. Expect a full appraisal, lease review for every commercial tenant and often property condition and environmental reports, especially when a past tenant was a dry cleaner or auto use.
Send the address, rent roll and leases through the form below, or call (877) 298-1001. We will separate commercial and residential income, apply vacancy to each, size the loan on DSCR and LTV and send back custom terms for that building.
Small buildings with a storefront and a few apartments can be underwritten as commercial mixed-use. Share the unit count and income split and we will confirm which program fits.
No. These loans are for investment property leased to tenants, not property you occupy.
Underwriting may give it little or no income, which lowers NOI and the loan amount. A bridge loan can fund lease-up before a permanent loan.
They can. Restaurants carry more build-out, insurance and turnover risk, so lease terms, build-out ownership and venting are reviewed closely.
Many sit in MU-1, MU-2 or form-based districts like the Near Southside; others are older nonconforming uses. Confirm with the City of Fort Worth before you close.
On both. Underwriting blends NOI from the commercial and residential space, with separate vacancy assumptions for each.
Yes, if it is stabilized and cash-flow positive. The new loan is sized on current NOI, DSCR and appraised value.
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