March 27, 20246-minute read
Author: Jamie Johnson
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A mixed-use property is a type of real estate investment that has grown increasingly popular in recent years due to changes in consumer behavior. Many home buyers like the idea of having their favorite shops, restaurants and even workplaces within walking distance of home. This provides a unique opportunity for experienced real estate investors. Are you interested in learning more about mixed-use properties? Let’s go over everything you need to know about this real estate investment. Keep in mind that Rocket Mortgage® does not currently offer financing for commercial properties.
What Is A Mixed-Use Property?
A mixed-use property is a type of investment property that combines commercial, residential and sometimes even industrial units. This combination of units allows investors to take advantage of different property types in a single investment. Mixed-use developments often contain complementary properties, like a hotel that also houses retail stores and a gym. It could also include an apartment complex that’s within walking distance of restaurants and local businesses.
These developments are often more convenient and desirable for residents because shops and amenities are within a convenient distance from the complex. From an investment perspective, a multiuse property often generates better long-term performance and creates higher returns on the investment(s).
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Types Of Mixed-Use Property Developments
When you’re investing in a mixed-use development, there’s no limit to the types of properties you can include. Below, we walk through the four main property types you’ll see. The main street space is a blend between residential and commercial units in a town's center. This space typically includes residential units within the top floors and commercial spaces on the ground floor. The main street model is one of the oldest and longest-lasting examples of mixed-use real estate. In a live/work space, tenants live and work in the same building. This could look like a business on the ground floor of the building, with apartments located on the top floors. A live/work environment could also include business partners who live adjacent to one another and their workspace. The residential and office mixed-use property is a blend of office and residential units. This space is primarily a commercial building with multifamily residential units coexisting in the same building. A mixed-use hotel typically includes a hotel, fitness center, retail area, cafe or restaurant and an entertainment space. Taking advantage of a mixed-use property in the hotel industry can help increase foot traffic and the hotel's profitability.Main Street
Live/Work
Residential And Office
Mixed-Use Hotels
What Does Zoning Look Like For Mixed-Use Properties?
Mixed-use zoning, also referred to as mixed-use planning, allows for a wider integration of different property types within the same development. These zoning developments usually fall into one of three categories:
Why Are Mixed-Use Developments In High Demand?
In recent years, there has been a growing demand for mixed-use developments. Here are a few reasons why that’s the case:
How To Find Mixed-Use Properties For Sale
Now that you understand why mixed-use developments are so attractive to investors, how do you find these properties? The most straightforward approach is to search through available market listings. However, a more strategic way to go about it may be to search for off-market listings. If you have the patience for it, this can often open you up to a larger pool of real estate. Using off-market listings can also help you cut out the middleman and avoid paying additional fees. Do your research and look for online websites that let you search for both on- and off-market listings.
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Pros And Cons Of Mixed-Use Property Developments
Like any investing strategy, mixed-use developments come with their share of advantages and disadvantages for property investors. Let’s look at some of the biggest pros and cons you should consider.Pros
Cons
Mixed-Use Property FAQs
As a real estate investor, you may have more questions about buying mixed-use property developments. Let’s go over some frequently asked questions. Mixed-use properties refer to properties intentionally used for a variety of purposes, including commercial, residential, retail and office spaces. For instance, a mixed-use property development could be a combination of an apartment complex, retail stores and businesses located within the same area. By comparison, a mixed-commercial property is made up of different types of commercial properties. This could look like a mix of office, industrial and retail stores located in the same area. An example of a mixed-use property development is a single building that houses different types of commercial and residential spaces. For instance, the complex could contain restaurants, stores and office spaces located on the lower level. The top levels could then be used as apartments or condos. Investing in and setting up the property is just the beginning. Once the property is ready, you have to find tenants and manage the property. You may want to hire an experienced property manager who is well-versed in dealing with both residential and commercial tenants. You’ll also want to know your local regulations and zoning laws to avoid issues with the property down the road.What's the difference between a mixed-use property and a mixed-commercial property?
What’s an example of a mixed-use property?
How do I manage a mixed-use property?
The Bottom Line: Mixed-Use Properties Can Help Diversify Your Investment Portfolio
A mixed-use investment property can be a big commitment, but there are many benefits to investing in one. As an investor, it’s possible that you’ll bring in a higher return on your investment. By investing in mixed-use developments, you’re also helping to build more sustainable and environmentally friendly communities. Whether you’re a novice or experienced real estate investor, Rocket Mortgage can help you on the home buying journey. While we don’t currently offer financing on commercial real estate, we can provide guidance if you’re interested in single-family, multi-family and other types of investment properties. Are you ready to get started? Fill out an application with Rocket Mortgage today.