Buying a mixed-use property for residential use. Anything I should look out for?

**avo81** · 07-14-2009, 03:41 AM

I found a house that's zoned 'mixed use' and set up originally to be used as a store on the first floor and an apartment on the second. The family living there now has it set up as a single 2-story house. I would be doing essentially the same thing, but using the upstairs as a traditional living space and splitting the first floor up between a workshop, a rec room, and a music studio (for personal use). There is a storefront to the property, which sits on the main street in the neighborhood, with showcase windows that I might put some art up in as for sale by owner with the artist's phone numbers displayed and take a small commission. Other than that I have no intention of using the space for commercial purposes, and I just want an interesting place to live.

So my question is what problems might I run into buying a property like that? I already checked the real estate taxes, which are reasonable for the area given the size of the building. Will I run into problems getting homeowners insurance or financing? It needs some work and is priced accordingly, and I'm qualified for at least three times the asking price, so I'm sure I can get a loan for it I'm just wondering if the rates or closing costs might be different. Is there anything else I'm not thinking of that I should look into before buying the house?

**avo81** · 07-14-2009, 03:42 AM

Also, I should probably mention that the property is in Philadelphia, PA.

**tucsonhomes** · 07-14-2009, 09:02 AM

While I know little about your community, most communities require business licenses to operate business activities (of any kind). A business license could lead to real estate taxation as business property which, in most cases, is much higher than residential use.

Operating some portion of your property as a business could provide you some income tax benefits in addition. Check with the local authorities and your accountant.

**avo81** · 07-14-2009, 09:36 AM

yes, but I'm not going to be operating a business there...

**tucsonhomes** · 07-14-2009, 01:16 PM

Originally Posted by avo81

yes, but I'm not going to be operating a business there...

There is a storefront to the property, which sits on the main street in the neighborhood, with showcase windows that I might put some art up in as for sale by owner with the artist's phone numbers displayed and take a small commission.

Most communities would consider this a business.

**avo81** · 07-14-2009, 01:49 PM

Well, I'd look into the whole art thing separately later. It wouldn't be a deal-breaker if I couldn't do it, but if I did it would just be to utilize the space with something cool and the profits would be only nominal (I'd probably not even charge a commision if I knew the artist or really liked their work).

My question though is about buying the house. How would the zoning affect the type of insurance and mortgage I get?

**Greg** · 07-15-2009, 08:33 AM

Originally Posted by avo81

My question though is about buying the house. How would the zoning affect the type of insurance and mortgage I get?

For these answers you need to talk to a local lender and a local insurance agent. Anything we tell you won't matter because we are not making the loan. Lenders have gotten really tight lately so don't do anything without asking your lender first.