Owner-occupied properties offer a wide range of benefits to commercial real estate investors, such as tax deductions, lower management expenses, and more.
1. Tax deductions for owner-occupied properties
Owner-occupied properties have a number of associated tax deductions that primarily fall under the category of “operational costs.” If utilities for all units in the property are paid by the owner, the total expense minus the costs for the property owner’s own dwelling can be deducted when filing taxes. Additionally, repairs and improvements can be deducted with supporting receipts. Among the other tax deductions for owner-occupied properties, commercial real estate investors can also claim depreciation based on the portion of the property that is occupied by tenants.
2. Owner-occupied properties attract better tenants
If you own and live in the building with your tenants, then you have the ability to screen applicants directly. Screening may mean a little more work to check out credit history, employment, and referrals, but it also means you get to choose who lives in your apartments. Also, when tenants live in an owner-occupied property, they are more mindful of noise and will be more proactive about keeping their spaces tidy.
3. Reduced property management expenses
Hiring a property management company becomes necessary to oversee the tenant screening, maintenance, and rent collection, especially when investors do not live on those properties. An owner-occupied property eliminates the need for third-party property management, which saves a lot of money annually.
4. Never miss a mortgage payment
An owner-occupied property with two or more rental units can easily generate enough revenue to cover mortgage payments while still leaving capital to put in the bank. Depending on the location and features offered by the property, an owner-occupied multifamily rental can charge the same per unit as a single family.
At The Capital Rams, we offer financing solutions for commercial real estate investors who want to purchase, renovate, or convert owner-occupied properties. We offer SBA loans, stated income loans, conventional financing, and more for owner-occupied property transactions. Contact the experts at The Capital Rams today to learn more.
