The Twin Cities housing market continues to be hot, hot, hot! Real estate remains a great investment. But many would-be investors get nervous about assuming the role of landlord. If that describes you, consider an owner occupied investment property. It’s a great way to dip your toe into the world of real estate investment.
An owner occupied investment property is one where you live in one unit and rent out the rest. It’s a set-up that works well if you own (or hope to own) a duplex, triplex, or fourplex. Their costs are comparable to those of single-family homes, but you get to offset the cost of your mortgage by collecting rent.
I’m not a CPA, and I encourage all investors to seek the advice a professional accountant when considering purchasing an investment property. That said, when you live in one of the units of your investment property, you’re likely able to deduct a portion of the costs of that property from your taxes as depreciation because you’re making income from the property. And since you’re living in the home, you’re able to take the mortgage interest deduction, too. Your CPA may know of other tax benefits or implications of an owner occupied property.
Collecting rent from the other units in your owner occupied property helps lower your own cost of living. You can put the money toward your mortgage, landlord costs, or save it to put a down payment on your future dream home.
When you live in the property you manage, you’ll likely pay less in maintenance costs, too. You can mow the lawn, clear the driveway of snow, and address repairs yourself easily and efficiently. What’s more, you’re able to write off maintenance repairs, such as sewer work, since the property makes you money.
Often, multiple-unit properties need some updating. By living on the property, you’re able to slowly make these updates yourself. Start with your own unit, fix it up, and then move into the next unit that needs work. You avoid the pressure of carrying a mortgage on a property with unoccupied units and demand higher rent for the improved units.
I’m an experienced real estate investor who loves to show new investors the ropes. If you’re interested in investing in real estate, contact Trent Shipley at Keller Williams Realty Integrity NW today.