In the aftermath of the recession, innovation is the new norm in real estate development. Investors who work with an experienced design team and contractor from the beginning of a project can save money and build a more creative space which will appeal to a wide range of tenants, both commercial and residential.

There are four key traits to consider when developing or purchasing a mixed-use property:

1. Flexibility. The most important part of developing a mixed-use project is obtaining zoning flexibility so that you can have retail, restaurants, offices, and multifamily residential all in the same building. Generally, retail and restaurants will occupy the first floor, with office and/or residential tenants on the upper floors. In addition to making certain that your property is zoned for mixed-use, it is also important to design the buildings in such a way as to make them versatile and useful for a variety of tenants and types of businesses.
2. Sustainability. There are many easy green building practices that will lower your maintenance costs without a huge upfront investment, such as: low-flow plumbing fixtures, compact fluorescent lighting, more insulation, Energy Star-qualified appliances, and high-efficiency electrical systems. Employing even a few green practices can lower your maintenance costs and increase your operating income in addition to attracting tenants and residents who are increasingly choosing sustainable buildings.
3. Diversity. One of the biggest advantages of owning a mixed-use property is that it usually has a diverse mix of commercial and residential uses and tenants. It allows you to diversify your real estate portfolio without having to own multiple properties. The risk of default is minimized and you can have staggered rent renewals as well as combinations of long- and short-term tenants. This blend of commercial and residential gives you multiple income sources and makes it so you are more likely to have a steady profit stream regardless of the market cycle.
4. Feasibility. In order to bring your project to life, you must consider whether the size and scope, both physical and financial, is feasible. If you are able to complete the project on a smaller scale or broken into different phases, it will be easier to obtain financing than if you attempt a larger project that will take more time and a larger upfront investment before you see any returns.

It is important to note that there is a high level of development and planning involved in creating a successful mixed-use project, so experience is an essential part of the process. If you do not have sufficient experience with mixed-use developments, then it is highly important that you assemble an experienced team to help you plan, design and finance your project. Want to know more? Contact Montegra today.

This blog was written by Bob Amter, President of Montegra Capital Resources, LTD., a Colorado hard money lender.  [google_authorship] has been in the private capital lending business for 41 consecutive years.