Purchasing an owner-occupied investment property in Detroit is an excellent way to start or add to your portfolio. But how do you find the property that will meet all of your needs? Let us help you learn how to find the right owner occupied investment property in Detroit in our latest post!.
First, Let’s Review Your Options
A Single Family Home
You could choose to purchase a spacious single-family home, renting out the extra bedrooms. This is a great option for singles or young couples who don’t mind sharing their space with roommates. Living in the home will help you ensure it is well-kept. Watch out for tensions arising between yourself and roommates. Remember, they are paying you to live there, so they should feel as if it is their home too.
A Multi-Family Building of Four Units Or Less
When choosing an owner-occupied rental property, many investors opt for a multi-unit property, containing four units or less. The reason for four units is the ability to qualify for an FHA loan. You can buy a four-unit property for very little money down.
An Apartment Building
An apartment building is anything with more than 4 units. It is considered a commercial property and will require different steps to obtain financing. It can be a very profitable investment but will also require a large commitment. By living onsite, you will be able to take care of everything. However, sometimes that is more than people want to take on. Make sure you are ready for everything involved with owning an apartment building before you buy!
Ask Yourself These Questions First
How much privacy do you need?
This will help you decide if you should purchase a single-family house or something with individual units. Keep in mind, it doesn’t have to be permanent, so if you think you could be comfortable for a year or two, it can be an excellent way to invest.
How much living space do you require?
This will help you determine the size and property type. If you have a lot of belongings, you might want to consider thinning things out before moving into a house with roommates or into a multi-family property.
How long are you going to be comfortable with this arrangement?
Most lenders will require you live in your house for the at least the first year in order to qualify for financing. Will you be comfortable with this arrangement during this time? Of course, you could have amazing roommates or neighbors, and consider keeping the arrangement long-term. You will be able to pay off your mortgage and live rent-free in many situations!
What will the numbers look like?
If you are collecting enough rent from the other tenants to cover the mortgage and other ownership expenses, your need for privacy might go by the wayside. Investors love having someone else pay their mortgage. When this also included their personal living expenses, it can be difficult to pass up!
Are you prepared to be accessible 24/7?
As a landlord, you should always tend to tenant problems right away. However, if you find yourself dealing with a needy roommate, let’s say, someone who knocks on your bedroom door at three o’clock in the morning because the air is blowing too cold out of the vents, you might want to consider something with a bit more space.
A good tip…
Have your tenants in mind before you buy. Maybe a friend or family member, so you can avoid getting stuck with a bad roommate (that you need in order to pay your mortgage.)