Owner Occupied Property: Living in Your Multi-Family Home

Are you ready to get started in real estate investing? If you’re considering a multi-family home as an investment property, you’re confronted with the intriguing possibility of living in a part of your investment while renting out the rest of it. 

Imagine the convenience of being just steps away from your tenants, always available to address their concerns or collect rent. And don’t forget about the financial benefits—renting out the other units can help cover your mortgage and generate a steady income stream. 

Before you jump headfirst into this exciting venture, there are some downsides to consider. This guide will explore the pros and cons of living in your multi-family home so that you can make an informed decision and determine if it's truly the right move for you.

Pros of Living in Your Multi-Family Home

If you're considering living in your multi-family home, there are several pros to consider. 

1. Take advantage of a lower down payment compared to buying a separate property. 
2. Living in your multi-family home allows you to pay off your mortgage faster by collecting rental income from the other units. 
3. You may be eligible for tax deductions, and it may be easier to manage the property when you're living on-site.

Lower Down Payment

With a lower down payment, you can start building wealth and creating a comfortable home for your family in a multi-family property. One of the advantages of living in your multi-family home is the required down payment size, which is smaller than if you were to buy a single-family property. This means you can begin your real estate investment journey with less capital. 

With the lower down payment, you can allocate more funds toward renovations or other investments to increase the value of your property. Additionally, living in one unit while renting out the others allows you to generate rental income that can help offset your mortgage payments. 

This can be especially beneficial if you are just starting out and looking to build equity and cash flow without too much financial risk.

Pay Off Your Mortgage Faster

Accelerate the path to financial freedom by crushing your mortgage payments and watching them crumble like sand in an hourglass. Living in your multi-family home allows you to pay off your mortgage faster. By renting out a portion of your property, you can use that rental income towards paying down your mortgage principal. This not only reduces the overall amount owed but also shortens the length of time it takes to become debt-free. 

With each additional payment, you move closer to complete ownership of your property and gain more equity. Paying off your mortgage faster provides a sense of security and opens up opportunities for future investments or other financial goals. So, if you're looking to accelerate wealth-building through real estate, living in your multi-family home can be a smart move.

Tax Deductions

Maximize your financial growth by taking advantage of the numerous tax deductions available for rental property expenses. When it comes to claiming tax deductions, there are several expenses you can deduct as a landlord. 

• Home insurance premiums
• Advertising fees
• Mortgage interest
• Bank charges
• Soft costs like construction or renovation funds
• Fees related to obtaining mortgages
• Property taxes paid to the municipality

Additionally, if you pay for utilities such as heat, water, and cable for your rental property, those expenses are deductible as well. Don't forget office expenses like pens and stationery, travel expenses, and repairs and maintenance costs in your rental property; they are also deductible. 

Easier to Manage

Managing a multi-family rental property becomes much easier when you partner with a full-service property management company. They take care of all the maintenance tasks, allowing you to focus on other aspects of your life. With their expertise, they handle routine maintenance procedures, ensuring everything is in working order and compliant with building codes. 

A full-service property management company promptly addresses any repairs or issues that arise, preventing further damage and costly repairs down the line. Additionally, they offer comprehensive inspections to identify potential problems before they become major issues. By entrusting the management of your multi-family home to professionals, you can have peace of mind knowing that your property is well-maintained and tenants are living in a safe environment.

Cons of Living in Your Investment Property

Living in your investment property may have its drawbacks. One of the cons is that you'll have less privacy compared to living in a single-family home. 

Since you're sharing the space with tenants, you may have to deal with noise and disruptions from their daily activities—not to mention being aware of the important things to know before renting a home to tenants. Additionally, being a landlord can be challenging as it comes with responsibilities such as managing repairs, dealing with difficult tenants, and handling the financial aspects of the property.

Less Privacy

Privacy can become a scarce commodity when living in a multi-family home. Living in a multi-family home means you may have to compromise on personal space. While residents are not physically residing in the same housing unit, they are technically still living under one roof with shared walls. This may make it challenging to find moments of solitude or quiet.

If privacy is something you value, living in your investment property may not be the best option for you. However, if you are comfortable sacrificing some privacy for the financial benefits of having tenants, then it could still be a viable option.

Being a Landlord Can Be Challenging

Being a landlord comes with its fair share of challenges and responsibilities, requiring careful attention to legal obligations, property maintenance, and tenant satisfaction. As the owner of a multi-family home, you will be responsible for finding and screening tenants, collecting rent payments, and addressing any issues that may arise. This can include dealing with repairs, handling tenant complaints or disputes, and ensuring compliance with regulations, such as health and safety standards.

Additionally, being a landlord means taking on financial risks. While rental income can help build equity and future cash flow, there are no guarantees that your property will always be occupied or that you will consistently receive rental payments on time. You may also face market risks, such as fluctuations in rental prices or vacancies.

Weigh the Pros and Cons of Living in Your Multiplex

Living in your multi-family home can be a double-edged sword. On one hand, you have the convenience of being close to your investment property and the potential for increased rental income. However, you may also face challenges such as privacy invasion and dealing with tenant issues on a daily basis. So, before deciding, weigh the pros and cons carefully to ensure it's a good fit for you. Remember, don't put all your eggs in one basket when it comes to housing choices!