Can I Buy a Mixed Use Property with an SBA 7a Loan?

Can I Buy a Mixed Use Property with an SBA 7a Loan?

Are you a real estate investor or business owner looking to expand? Book a discovery call with Beau to learn all the ways he can help you - https://investorfinancingpodcast.com/rumble

Hi Beau, I’m buying a mixed use property with a coffee shop and two residential apartments. Do you use the rental income from the apartments in the DSCR calculation?
I plan on adding in some food menu items to the coffee shop and increasing revenue significantly but wanted to see if I could also include the apartments because I think I’m going to have some cashflow issues.

How would you navigate this deal?

Thanks,
Jesse

The episode discusses the possibility of buying a mixed-use property with an SBA 7a loan. Jesse is interested in purchasing a property that includes a coffee shop and two residential apartments. He inquires about using the rental income from the apartments in the debt service coverage ratio (DSCR) calculation. He mentions their plans to add food menu items to the coffee shop to increase revenue. He expresses concerns about potential cash flow issues.

The response states that the coffee shop would be eligible for SBA financing if it occupies at least 51% of the total square footage. However, the rental income from the residential apartments cannot be included in the DSCR qualifications for the SBA loan since they are long-term rentals. The business must be able to debt service the existing loan without relying on the rental income. Although there may be some ways to work around this, the SBA loan calculations do not consider rental income from spaces other than occupied ones. However, it is mentioned that the rental income could contribute to the global cash flow.

Beau offers further details on this matter and invites the individual to book a call to discuss SBA financing options, including the 7A and 504 loan programs.

If you'd like to ask me a question about real estate, do it here -- https://investorfinancingpodcast.com/ask

Timestamps:
(00:05) Buying a mixed-use property with a coffee shop and two residential apartments.
(00:31) Eligibility for SBA financing if the coffee shop is 51% of total square footage
(00:50) Cannot use the rental income from residential apartment units in the DSCR calculation for SBA loan qualification.
(01:27) Can help with global cash flow but not for the actual DSCR on the business.

💥 Thanks for watching 💥
#SBA7a #SBA7aLoan #MixedUsedProperty #CoffeeShop

About Beau: Beau Eckstein is a real estate entrepreneur, TV personality, and commercial mortgage advisor specializing in construction financing and multi-family lending.

🎥 The video interviews we do on IFP will help you scale your real estate business and learn how to finance all your projects.

About the Channel: Want to structure your investments in the right and secure way?

Learn great insights and make the right decisions through the Investor Financing Podcast hosted by Beau Eckstein.