The Benefits of Owner Occupied Properties

by / Friday, 02 March 2018 / Published in Financing Blog

Even though renting commercial property does offer its benefits, being a renter rather than an owner can also impede growing business operations or the possibility of expanding a business portfolio. The fact is that the possibilities offered by owner occupied properties include greater control over a property, more favorable financing from a lender, and other financial benefits that you may not be aware of.

Occupying your own property means that your company exerts more control over occupancy costs, including the property’s utilities and maintenance. And since the property is yours, you can expand a building or a house without having to consult with a landlord. In fact, occupying your property allows you to become a landlord yourself. More than just providing a place for your business to occupy, you can choose to rent your property out to other businesses, or perhaps invest in residencies like homes and apartments. This allows you to create sources of revenue from renters.

You’ll also find financial lenders look more favorably on backing owner occupied properties, since the lender knows you are an occupant and will be fully invested with the property to make it financially work. Many lenders will allow for much smaller down payments for owner occupied property, for rates as small as 5 percent for a conventional loan. Interest rates are also lower for an owner occupied property, on average ranging from 1 to 1 and a half percent less than financial loans for other properties.

You may come to a point where you want to expand your business operations beyond your property. In this case, you can purchase another property and move to it while keeping the old as a pure rental and continue to derive fees from the renters. In time, you could even create a string of rental properties. However, should the property no longer be profitable for you, you can use a tax-free exchange of your property for a “like-kind” property. The definition of a like-kind property is actually very broad, referring mostly to the use of the property and not its specific type. This means you could exchange a rental home for an apartment building, or even trade for vacant land that you can start from scratch on.

Choosing to reside in your own property can give you a financial leg up on other forms of property ownership, eliminating rental costs and allowing you to use your property in more ways to serve your business. Check across different lenders to see what terms they offer owner occupied properties and see what works best for you.