Are you buying your first home and can’t seem to find the perfect home? Or are you looking to buy an investment property but can’t seem to afford it? If you’re in either of these situations you may want to consider buying a multi-family home and living in one unit and renting the other. You might be saying things like “that sounds complicated”, “I wouldn’t qualify to purchase a property like that”, or “That sounds like a lot of work”. Well it might not be as complicated or expensive as you might think.
There are many advantages to living in an owner occupied investment property. For starters the loan would not need to be structured as a true investment property. Most lenders will offer traditional home loans for owner occupants thus offering lower interest rates and less stringent lending guidelines which makes it much easier to afford the upfront cost as well as the savings in interest over the life of the loan. There are also many tax benefits of being an owner occupant including the ability to Homestead the property therefore lowering your overall property taxes. You can also talk to your tax professional about depreciation, which allows you to write off the depreciated value of the rented unit over the course of its useful life therefore reducing your overall taxes. The most obvious advantage to owner occupancy is the cashflow. You can live rent/mortgage free or even make money simply by living in one unit and renting the other. Let’s say your mortgage is $1,100 per month and the other unit rents for $1,200 per month, not only is your mortgage being paid for but you are also pocketing an additional $100 per month. This allows for you to live sustainably for as long as you want. If you have the desire to upgrade and move into a bigger or nicer home you can rent both units (if we use the previous example let’s assume one unit rents for $1200/month and the other for $900/month) and not only have your mortgage paid for just as when you lived there but now be making or cashflowing $1,000 per month. The best part about this is most lenders are aware of this process and allow you to use the cashflow as qualifying income therefore affording you a larger budget on your next purchase.
Now this route of living and investing is not cut out for everyone. There are some things you will certainly want to keep in mind. Being a landlord is not always easy, some people opt to use a professional management company to avoid some of the headaches that come with being a landlord however if you feel you can manage the property yourself you’re going net more money. I’ll also add that I am not a legal, mortgage, or tax professional so seeking advice from these professionals is advised.
There are many more advantages to buying an investment property whether you live in it or not but these are just a few of the advantages of owner occupied investment properties. If you have ever considered buying a home or an investment property please call me today to discuss your options.
Thanks for reading!