How to Start Real Estate Investing With an Owner-Occupied Property

How to Start Real Estate Investing With an Owner-Occupied Property

Published On: July 16th, 2021

If you’re like many people, you want to break into the real estate investing market. The good news: You can do exactly that by buying a multifamily property and living in it while you rent out other housing units. This guide explains this option, which can help you kick-start your real estate investment career.

How to Start Real Estate Investing With an Owner-Occupied Property

Though it’s not right for everyone, the best way for you to get started in real estate investing may be to purchase a multifamily property, live in one unit, and rent out the rest. You can do this with a duplex, triplex or fourplex, which means that regardless of what type of initial investment you’re making, you may be able to build equity while living in your own home free.

What is an Owner-Occupied Multifamily Property?

An owner-occupied multifamily property is a duplex, triplex or fourplex in which the owner lives while renting out other units to tenants. (Some bigger units are also classified as owner-occupied multifamily properties, but that’s more uncommon.)

Benefits of Investing in an Owner-Occupied Multifamily Property

There can be several benefits to investing in an owner-occupied multifamily property, including:

  • Favorable financing terms due to being “owner occupied”
  • Easier investment for people who may not be able to afford separate mortgage payments
  • Offset mortgage costs

Here’s a closer look at each.

Favorable Financing Terms With an Owner-Occupied Property

You may be able to get better terms from your lender as an owner-occupant than you would as a standard real estate investor. Those more favorable terms may include lower interest rates and a lower down payment requirement.

Easier Investment

The type of financing you can secure for an owner-occupied property may enable you to both invest in real estate and in your own home, which may make it easier for you to become a real estate investor. In some cases, as an owner-occupant, you can get a mortgage loan with as little as 3 percent down – and that can enable you to buy a larger property than you could ordinarily afford.

Offset Mortgage Costs

When you live in the property while renting out other units, you can charge the tenants enough to cover your mortgage payment (and often make even more). Then, you can increase the amount you pay monthly or invest the overage into the property by making improvements.

Financing an Owner-Occupied Multifamily Property

When you want to finance a commercial property, you usually have to put down at least 25 percent of its purchase price. However, with an owner-occupied commercial property, you could get a loan for as little as 3 percent down.

Sometimes interest rates are lower for owner-occupants, as well.

The U.S. government even has government-backed loan products that work well with owner-occupied multifamily properties, such as FHA loans. However, you may also want to talk to a local lender; many are willing to work on special loan products for owner-occupants.

Are You Buying or Selling a Duplex, Triplex or Fourplex in Silicon Valley?

If you’re selling a duplex, triplex or fourplex in Campbell, Cambrian Park, Los Gatos, San Jose, Santa Clara, Saratoga, Willow Glen or another community in Silicon Valley, we’re here to help. Call today or fill out the form below to find out about our innovative marketing plans that can put your investment property in front of all the right buyers.

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