Income Property

Want to invest in real estate without quitting your full-time job? Interested in income properties but don’t have the cash to get started? You can start a real estate investing career with lower risks by buying an Owner Occupied Duplex.

Buying a duplex is a great option for First Time Home Buyers but it doesn’t matter if its your first house or fifth buying a duplex and living in half of it is a great way to produce passive income.

Buying multifamily properties with the idea of living in one until and renting out the rest of the unit, whether one or more is one of the safest ways to start your investing career.

There are many benefits of buying owner occupied investment properties and a few risks as well, but before I get into this topic, I would like to suggest that you check out my article Real Estate Investing: Single Family and Multifamily Properties”.

Benefits of Buying Owner Occupied Income Properties

Lower Risk

As I mentioned above this is one of the lowest risk real estate investments you can find. All investments come with some level of risk. There are no sure things concerning investing, it doesn’t matter where you invest your money there will be some risk involved.

Living in part of a multifamily property greatly reduces the risk of loosing all your money or the property. Even if you can not get the rest of the property rented, which would be a worst-case scenario, you would still be making the mortgage payments yourself.

On a typical single-family rental property, anytime a tenant moves out of your property the property then becomes vacant and you will be having to make the loan payments on top of paying your own bills. When you are occupying part of a multifamily your personal bills will include the loan payment of your income (or investment) property. You won’t have to make two mortgage payments this way.

When starting out in real estate investing going with a low risk investment is usually the best way to begin a successful career. On your first investment it is better to make small profits then take a risk and make no profit or worse, loose money on the deal. It can take years to recover from a bad investment, so start out with a good investment.

Passive Income

All rental property proceeds are technically considered passive income, so if you buy a rental property you will generate passive income.

The point I want to make here is that if you purchase a single-family home to live in you will have a mortgage on your property, but if you buy a multifamily property to live in then your mortgage is then allowing you to generate passive income.

Passive income is the key to being in control of your own life. If you have to work to make a living you are living to work. If you find a way to make money without working you are now living.

Now I know plenty of people that live great lives and are extremely happy and they are working a full time forty hours a week job. I am not suggesting that you can not be happy working forty or more hours a week, we should always find a way to be happy in all our circumstances. I do think you can enjoy life more, be with family more and REALLY be in control of your life when you are generating passive income.

If you have to pay a $1,200 mortgage payment each month then why not create a stream of income from it. Make your money MAKE you money!

Mortgage Free

Technically you won’t be mortgage free, but you can have someone else pay your mortgage for you. Most income producing properties produce enough income to cover the cost of the loan or mortgage payments. This is true with owner occupied income properties as well.

In my area you can buy a decent duplex and have a monthly mortgage payment of $800 to $1,200 with taxes and interest included. If you occupied one unit and rent out the other unit you could easily cover your $800 mortgage. This obviously depends on the location, number of bedrooms and other factors.

I have seen many income property owners cover most or all of their mortgage with the rent they take in.

Better Tenants

There is no guarantee that any tenant will be a “good tenant” but you will have a better chance of finding a good tenant in an owner occupied multifamily rental property. My reasoning for this is that you will automatically filter out most of the “bad tenants” just because they know you will be right there keeping an eye on them.

I have seen rental applicants run away when I tell them I do quarterly inspections on my rental properties. This is because they know that I will be watching them, and they won’t be able to get away with being a “bad tenant”. Now if an applicant is told that you, the owner/landlord, will be living in the same building just imagine how fast they will run because they know they are not going to be a “good tenant”.

Now you absolutely must still run a background and credit check on all rental property applicants. You can not just assume that they are going to be a good tenant.

Purchase in a Higher Price Range

If you use the income produced from the property as part of your monthly income you can actually get approved for a higher purchase price.

It may not always be best to use this method. Just because you CAN purchase a higher priced property does not mean you should. Stretching yourself thin financially may not be your best option.

This method of obtaining a higher priced home also goes against the whole reasoning behind getting an income property. You will have a harder time paying down the mortgage and making a real profit from the rental unit.

I have seen where this works out good for the buyers. The buyers wanted to get into an area they couldn’t afford and a type of house they couldn’t afford. Even though they could get approved for the price range they needed they actually were not that far off.

They found a property that had everything they wanted, in the location they desired, and it had a space that could be rented out, so their loan office added that rental income into their personal income and got them approved for the loan and they got the house.

I wouldn’t suggest this for everyone, but it did work for that couple. I also want to mention that not all lenders will allow you to use the income from a property you are purchasing to be counted towards your income to get your approved.

Risks of Buying Owner Occupied Income Properties


This can happen with any rental property, but it can be even more costly for you and your family if it happens in the property you are living in too.

If a tenant were to not report to you about an issue on their side of the property and it were to get bad enough, you and your family might have to move out for a few days to have it fixed. Even if you wouldn’t have to move out it is always inconvenient have to deal with contractors in your property especially if they have to shut the electric or water off.

I do think this is less likely to happen on an owner occupied income property but it can still happen. You should always do Quarterly Inspections on your properties.

Tenant Defaults

Again, this can happen on any rental property but if you are relying on the income from the rental unit to pay your own mortgage then it becomes a big problem for your family.

If you are relying on the rental income to pay your mortgage you will need to make sure that you have a few months of mortgage payments saved up as a cushion in case of unpaid rent or vacancies. Evictions can take a long time to be finalized and you need to make sure you are covered.

Too Close to Your Tenants

This is probably the biggest risk involved with an owner occupied income property. You tenant not only knows where you live, they live right next to you.

This can be a good thing with most tenants because it will keep them honest but there are a few bad tenants out there that you may not want them to know where you live. You may not always want to see you tenants every day.

Even people you really like start to get on your nerves after a while. IT is hard to live close to people and share the same outside space. Everyone is different though, this might not bother some people, but you should consider this if you are thinking of buying an owner occupied income property.

If you are interested in real estate invest, whether full time or on the side you should check out my other article on INVESTING.

I would also encourage you to check out my book Anyone Can Invest In Real Estate.

I know I did not cover every benefit and risk of buying an owner occupied income property, so leave me a comment bellow and let me know what your thoughts are and what I left out. Also, if you have any questions feel free to email me or comment bellow.

Take a look at my Books

"Anyone Can Invest In Real Estste"

"You Can Be Mortgage Free"

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