As any commercial real estate investor knows, there are an abundance of different investment strategies one can take to generate steady income over time.
In this page, we’ll look at owner occupied investment property.
First, we’ll define owner occupied real estate by running through some examples, then look at the benefits to owners, then show you how you can quickly discover new investment properties and owners in your preferred market.
Finding Owner-Occupied Investment Property
For new or first-time investors, and those looking to attach an additional stream of income to their residence or business property, occupying space in an investment asset is fairly common.
These properties are referred to as “owner occupied” real estate. The owners themselves may be referred to as an “owner occupier.”
What is Owner-Occupied Real Estate?
As the name suggests, owner-occupied investment properties are multi-unit residential or commercial real estate in which the owner resides in one of the units, and rents out the remaining units to earn income.
There are three basic types of owner-occupied properties:
- Multi Family
To be considered owner-occupied, the owner must use the property as his or her primary residence or occupy more than half of the commercial space.
Owner Occupied Multi Family Property
Any primary dwelling can be considered a residential owner-occupied investment property.
From an investment standpoint, however, an owner occupied residential property will always be multi family—in other words, 2 units and above.
The list of owner occupied multi family property could include duplexes, housing coop, or even multi unit apartment buildings.
The owner lives in one unit while renting out the others for income.
Commercial Owner-Occupied Property
Commercial property is considered owner-occupied if the person holding the loan occupies 51% or more of the total commercial space.
For instance, a business owner might purchase a warehouse or shopping center as an owner-occupied investment, running his or her business out of one section, and renting the remaining space to another tenant.
Some properties are considered “mixed-use” because they contain both commercial and residential space.
In more vertically built areas of the country, buildings often have retail space on the main floor, and apartments on the upper levels.
Other building will be retail on the ground level with offices above.
In any case, if the owner occupies one of the residential areas or uses the commercial space for business purposes, the asset will be considered owner-occupied.
Benefits of Investing in Owner Occupied Property
The two main benefits of investing in owner occupied real estate are:
1. It serves as an entry way for new investors and residential investors that want to transition into commercial.
2. It helps investors and property owners earn on all of their properties, residence, business, or otherwise.
It’s an Entry into CRE Investing
Owner-occupied properties are a great way to start your real estate investment portfolio.
Typically, lenders will give lower interest rates to borrowers who live in or have businesses on the property.
In turn, your monthly payments will be lower. Even something as small as a duplex or fourplex could create extra income quickly.
The rent from your tenants should cover most if not all of your monthly mortgage, freeing up capital for other investments.
It Helps Earn Returns on a Residence or Business Location
Real estate investing is not always easy. But owner-occupied investment properties can generate significant income over time if done well.
First, consider the tax breaks. Owner-occupants of commercial or residential properties can write off rental-related costs and other expenses associated with owning the property.
Owners can also deduct the property’s depreciation and portions the property tax when filing taxes. The tax breaks alone encourage many buyers to purchase investment properties.
Secondly, the rental income generated from tenants often covers all monthly mortgage expenses. Many investors choose owner-occupied real estate because it essentially allows them to live or occupy commercial space for free.
How to Find an Owner Occupied Investment Property
Whether you want to find a new property to invest, or simply find out whether a property is owner occupied, you can do the following:
Discover Investments Off-Market with Reonomy
Spotting owner-occupied commercial properties on the Reonomy Platform is as simple as making a quick selection.
You can search your desired market on a variety of levels (from full states, to an MSA, city, county, street, or exact address).
Then you can search for properties that haven’t been sold in a long time:
These filters combined with the “Owner-occupied?” selection, plus any additional filters you’d like to add (like building size, asset type, and tenant type), let you quickly see owner occupied properties that are likely to sell.
In Reonomy, you can then see who the owner actually is, and access their contact information.
Search For Sale by Owner (FSBO) Listings
In addition to off-market listings, you might also consider For Sale by Owner (FSBO) listings.
While it can be challenging to find FSBO multifamily and commercial real estate, there are several options to search online.
Advantages of Buying Real Estate For Sale by Owner:
Most on-market properties are listed by a licensed real estate broker. At closing, both the listing broker and the buyer’s broker (if applicable) will receive a percentage of the sales price.
On a large-scale investment property, the broker fees could cost tens of thousands of dollars.
Buying an FSBO property, on the other hand, eliminates broker fees, meaning more money to invest in improvements or other projects.
Residential Property for Sale by Owner:
Perhaps the most well-known FSBO real estate site, For Sale by Owner allows buyers to search for residential listings nationwide.
To find real estate that could be used as occupant-owned properties, start by entering a location.
Next, choose “multifamily” under the property type tab. Be sure to also select the “for sale by owner” option under listing type.
Because the website is so popular, investors will find more properties on this website than any of the others listed below.
It’s also the easiest site to navigate of those listed here. View the results in either list or map format.
2. Find My Roof
Find My Roof is a free advertising site for listing residential and commercial real estate in the U.S. The site, founded in 2006 in Georgia, allows users to search both FSBO and broker-listed investment properties.
Buyers interested in owner-occupied investment properties can search available FSBO residential real estate nationwide.
From the website’s homepage, click on “For Sale by Owner,” and choose a selection from the dropdown menu.
In the next screen, you can narrow your search by selecting a state, city, or zip code.
Find My Roof does not have an extensive catalog of properties to choose from, but it’s worth performing a search to see what’s available.
Even though the name of this site indicates it’s only for commercial and industrial properties, Buildings by Owner also has a section for multifamily properties for sale by owner.
To search, type in the geographical location, and choose “multifamily” from the dropdown menu.
Narrow your search by entering specific keywords or parameters in the listings page.
Commercial Property for Sale by Owner
It may surprise you to learn that real estate investors still find properties on Craigslist.
However, to find FSBO commercial properties, you’ll have to either sort through the results or search specifically for “by owner” listings.
To begin your search, find the Craigslist serving your local area.
Then, choose “office/commercial” under the Housing section. This will populate the results list.
To find commercial properties for sale by owner, enter “by owner” in the search tab at the top of the results page.
2. Find My Roof
As mentioned above, Find My Roof helps investors find the ideal property in their area. Under the “For Sale by Owner” tab, choose “Commercial.”
Then, using the search functions on the right side of the page, narrow your results by location, square footage, and more.
To find a commercial property that will work as an owner-occupied investment, choose a location, then choose the type of property you’re interested in purchasing.
Options include retail, office, industrial, and special purpose.
The search list shows all available properties in your search area. Filter search results using specific keywords or by entering square footage limits.
Whether you’re new to real estate investing or a seasoned veteran looking to expand your portfolio, owner-occupied investment properties are a unique way to grow your business.
Searching off-market properties through Reonomy could widen your search circle even further, helping you find the perfect property at an affordable price.