mixed use property

[LAURIE ROCCHIO]

I have a request to do an FHA appraisal on a mixed use property. There is a store front on the first floor, and 2 apartments above. I can't find any info in the FHA handbook regarding whether an FHA appraisal is allowed on this type of property. Can anyone provide me with any information or direct me to the right place to get the HUD info on this?

 

[xm39hnu]

Laurie, I don't think FHA will lend on commercial property. But that's not your problem. You can appraise a white elephant to FHA guidelines. There are no special forms. As long as you tell the truth about the property, and address FHA's concerns about health, safety, etc., then you will have performed the appraisal to their guidelines. Whether FHA will insure it or not is the lender's problem. You might want to tell your client about the property's mixed-use character and see whether they wish to proceed.

 

[Daystar]

FHA lends on mixed use property, there are several conditions, If a case # has been assigned with you as assigned appraiser you must complete assignment. I said that to say this . The commercial portion of the building ie GLA can not be greater than 50% of the entire building, you can calculate the common hallway into the residential portion of the building. If the commercial portion is greater than residential, complete assignment and in addendum reject the property for financing as it does not conform to HUD guidelines. Other rejects are, Bars, Restaurants, Dry cleaners, Railroad to close, etc, etc. Any other questions e-mail me.

 

[ROBERT JONES]

There are percentages of commercial space that apply to the type of dwelling.

1 story - 25%
2 story - 49%
3 story - 33%

 

[LAURIE ROCCHIO]

thanks so much for the help

 

[JSmith43]

I don't feel like scanning the last couple years of mortgagee letters, but I do believe most investors use the following guideline as their interpretation of FHA standards: The property must be predominately residential in appearance and basically, must "feel" residential and remain predominately residential in terms of functionality

So, the non-residential use cannot significantly detract from the appearance and residential character of the property, whatever that means. I think striped barber shop polls are out of the question as well as a Miller High Life sign the property owner got from the distributor

That is for 203B loans.

For conventional work, any agricultural use better use less than 20% of the total land area & be permissible by zoning. Same for other commercial uses.

The primary purpose of the property must be residential. I doubt that means 50.1% for most UW's

 

[john eickhoff]

Pull out FHA Handbook 4905.1, dust it off, and you will find your answer on page 2-3, paragraph 2-6 Nonresidential Use. If you can't find it let me know and I will copy it for you.