Thursday, September 2, 2010

Prospect Heights 3-Family/Mixed-Use: 692 Washington Avenue

692 Washington Avenue is a nice-looking three story building in a budding stretch of Prospect Heights. For those of you as in love with the Prospect Heights stretch of new & improved Vanderbilt Avenue as we are, it doesn't take too much vision to see this place having some upside. However, there's a little devil in the details with its 3-Family status. While Property Shark has it as a 3-Family residential building, it's being advertised as a mixed-use property because there's a vacant commercial space on the first floor. This difference can be crucial.

In case you don't know, there's a major distinction between residential loans and commercial loans. Namely, commercial loans require 25% down or more these days (30-50% down often times, depending on circumstances and where you go...). FHA loans on residential multi-family properties (the backbone of this website and our investment approach) can still be obtained with 3.5%-5% down. If there is one store in a building, even a 3-unit building like this one, it is considered "mixed-use" and requires a commercial loan. Run this by your mortgage broker, but if there's a currently an empty store on that first floor and the C-of-O is a 3-Family residential, perhaps you can just use it as an apartment and go FHA. They tell us banks want to close with whatever the current use of the place is. The listing has only a thumbnail, but there looks to be a cute-sy commercial space in place there:

Pro's: budding neighborhood, curb appeal, price point, "modernized" 2BR rentals getting $1,400/month already

Con's: a little off the beaten path, uncertainty about mixed-use vs. 3-Family status, not the best time or neighborhood to rely on commercial tenants or to try and put 30%+ down

Ideally: One could close this property with a residential loan. There's an opportunity here for sure, and down the road this might be a property with a lot of upside.

1 comment:


    Shortsale two doors down on 696 Washington is in contract after listing at $699K.