Should You Live in Your Investment Property? Investing Tips For Multi-Family Real Estate

Owning a multi-family property is one of the best ways to invest in real estate and earn passive income. Some owners even choose to occupy one of the condos and townhomes or duplexes in their investment properties. Living in a multi-family property has advantages and disadvantages for the owner, whether it is a duplex, a triplex, a guest house, a garage apartment, or some other former form of rental. A big question is whether it is wise for the owner to live on the same property as their renters. Keep reading to learn about the pros and cons of living in your investment property as a landlord.
Pros of Living in an Investment Property
There are several benefits for owners who choose to live in their multi-family property. This includes some attractive financial incentives, simpler mortgage payments, and easy access for those who choose to be "hands-on" landlords.
Owner-Occupant Financial Benefits
Under Canadian law, buildings with one to four dwelling units are considered residential in terms of zoning. Buildings with five or more units are considered commercial property. If an owner chooses to live in a commercial unit as their primary residence, it dramatically impacts the down payment required for a rental property mortgage.
If an investment property is going to be non-owner occupied, meaning the owner will not live in one of the units as their primary residence, the required down payment will be 20 percent. If the property will be owner-occupied, the down payment can be as low as 5 to 10 percent. This is a dramatic financial incentive for anyone considering purchasing an investment property and living in one of the available units.
The number of units in a property owner-occupied determines whether the down payment will be 5 or 10 percent. In properties with one or two units, the down payment is 5 percent; in properties with three or more units, the down payment will be 10 percent.
Simpler Mortgage Payments
In a non-owner-occupied investment property, the owner has to make two separate mortgage payments for their primary residence and a second for the investment property. Living in a unit in the investment property simplifies this by reducing the situation to a single mortgage payment. This can often be easier for some owners to make the mortgage payment, and it requires less time to make a single payment to a single lender.
It is also highly likely that an owner-occupant will be able to secure a lower interest rate from the lender on their mortgage compared to a non-owner-occupied investment situation.
Hands-On Landlords Have Easy Access

This advantage comes down to the landlord's personality. Some landlords like to be more hands-on in the day-to-day goings-on in their investment property, while others prefer to be hands-off. If an owner is a hands-on type, they are more likely to enjoy this living arrangement.
If an owner's primary residence is in the investment property, they are right there in case of an emergency. Tenants are much more likely to avoid having rowdy parties, and the owner is quickly available in an emergency that requires repairs. An owner-occupant can quickly assess the amount of damage in an emergency, such as a burst pipe or a failed HVAC system, and quickly call a specialist for repairs. If an owner does not live on-site, it can be difficult even to assess the urgency of a situation.
Living On-Site Gives Homeowners Experience in Property Management
Living in your rental property can be a great first step to starting a career as a landlord. Homeowners who rent out their property to other people can gain valuable hands-on experience in property management. This experience can be extremely helpful for homeowners interested in going into property management or wanting to invest further in real estate.
Managing a property involves a lot of responsibility, from keeping the property in good repair to collecting rent and responding to tenant requests. Homeowners who are able to handle these responsibilities effectively can earn a good reputation in the rental community and make it easier to find future tenants. In addition, managing a property can also be a great way to meet new people and build relationships with other landlords and industry professionals.
Cons of Living in an Investment Property
While there are some great financial and personal reasons to become an owner-occupant of a multi-family property, it also has its downsides. The easy access that hands-on landlords enjoy can work both ways, for example, limiting the owner's privacy and personal time. The owner's tax situation can also become a bit complicated. Here is a closer look at these two "cons" of being an owner-occupant.
Easy Access Goes Both Ways
While a hands-on landlord can have easy access to the property and neighbours in a life-in situation, the tenants have easy access. A landlord will typically know a lot of personal information about tenants who live next to them and vice versa. Owners who appreciate personal privacy may not enjoy the proximity of their tenants in every situation.
It's also an unwritten rule that tenants expect the owner to abide by the same rules as them in the interests of fairness. If the owner stipulates, for example, that tenants cannot have loud parties that last until 1 a.m., tenants expect the same respect and treatment from the owner. Whether a landlord personally likes or dislikes a tenant is not relevant because this is ultimately a business relationship. Owner-occupants must maintain a level of professionalism to have a successful relationship with a tenant. When it comes to repairs, the owner's DIY skills need to be more advanced than mere proficiency with essential tools for homeowners.
Taxes Can Become Complicated
Under Canadian tax laws for rentals, an owner-occupant's tax situation can quickly become very complicated. This can be a double-edged sword in many ways for the owner. For example, shared spaces in the property, such as a communal laundry room, maybe deductible under the Income Tax Act. If the owner provides WiFi or cable to every unit on the property, that could also be deductible. Meanwhile, the owner must carefully track all rental income versus expenses.
The complexities of what can and cannot be deducted may require the assistance of an accountant or other tax professional. Owner-occupants must also become meticulous record-keepers to track all expenses accurately.
Build Equity and Earn Income With Multi-Family Properties
The down payment and other incentives can inspire many people to stop renting and buy a home. This is an excellent way for many investors to own real estate. However, the pitfalls of the process should also be carefully considered upfront. Living in a multi-family dwelling is not a good fit for everyone, so weigh these pros and cons carefully while considering the options.
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