Living on Main Street in small town USA isn't exactly the definition of living the American Dream, or is it? There are many places to call home, as it is very common to see these types of dwellings on shows like "extreme homes" or "you live in what?" these days. What about utilizing the affordable spaces that seem to be available in most small city commercial districts? This is an idea that always thought was very neat, as the architecture, detail, and history of most small town buildings is hard to replicate economically.
So I tried it.
Along with my wife, two daughters, and two English Springer Spaniels, we bought a building on Main Street, in downtown Ionia Michigan.
Living on Main Street in small town USA has its perks. Most buildings are similar to the one pictured above that we purchased, which means you have an option of generating income from the street level to cover most of your expenses, if not all of them! That's right, you could possibly be living for free! You are usually within walking distance to most everything, which is very convenient, and often times a good excuse to get some exercise. Parades! Christmas parades are often very cold, Fourth of July parades are usually very hot, and both are usually directed down Main Street. How nice would it be for you and your friends to have a front row view from your climate controlled living area! One drawback you often hear, is the complaint of having no yard. It's not so bad, really! No yard means no lawn mower, no weed whip, no grass seed, no raking, and the list goes on. Most small town's have an abundance of recreation area to replace your lack of a yard. State land, municipal parks, fair ground property, and biking trails are just a few.
For entrepeneurs, small business owners, hobbyists, and shop owners this could be the ultimate set up. Live upstairs, work downstairs. With the price of these buildings being comparable to a residential home, you could quite possibly have a brick and mortar business location, and your awesome home for the same monthly mortgage payment you would have for just a normal residential property. If you ever feel like moving, the income generated from the living space can be a significant boost to your monthly earnings.
Financing older commercial buildings can be tricky, which is a growing concern in the commercial real estate industry, and an issue that may need to be addressed in the near future. When looking at financing options for our building, we were discouraged, thinking the only answer was a high interest, 5 year commercial loan with a large down payment. Upon searching and talking with some mortgage lenders, we found a pretty neat way to not only buy buildings like this, but also get the necessary funds to make improvements. We discovered the FHA 203k refurbishment loan, which would secure a low downpayment program, ammortized over 30 years, with improvements rolled into the loan. The catch, the lresidential to commercial ratios of the building have to be compliant, and the building has to be the principal residence of the person obtaining financing. The ratios meant the building had to be half living, half commercial if it was a two story, and 33 percent commercial, 66 percent residential if it was a three story. The loan works by having a contractor write up a estimate, with proper description of the work and improvements that will be completed, and then having the building appraised using the current value, and the projected value after the improvements have been completed.
It is very important to use a lender with vast knowledge on 203k loans, and a contractor with equal knowledge of the subject to ensure a smooth process. Living on Main Street USA in a commercial building may be the best financial move you ever made, and a pretty neat place to live too! For more information on 203k loans, lenders, contractors, or available buildings that would qualify, be sure to contact me. I would be thrilled to be your trusted real estate advisor. Contact me for more information about living on Main Street in small town USA.