Being an owner-occupant

There are many opportunities to be a homeowner and many options available to you. A good compromise between buying a property as a first investment and living in another property would be to become an owner occupant. 

What does this mean? Are there any advantages or disadvantages to being an owner-occupant? 

If all these questions are on your mind, Vistoo can tell you more about owner-occupancy and how you too can assess whether this is the right option for you.

What is an owner-occupant?

Being an owner-occupant means buying a multi-unit property (a multiplex or an income property with five units or less) and actively living in one of the units.

It is possible to buy a property with this plan from the start, but can you move in along the way? Let's take the example where you own a triplex, but you’d like to live in one of the addresses currently occupied by a tenant. What should you do?

You may repossess a unit, but you must respect certain deadlines. A notice of repossession must be sent to the tenant no later than six months before the expiry of the signed lease.

A tenant who signed a lease on July 1 must receive the notice by January 1, otherwise the landlord will have to wait another year. If it is a short-term lease, you must give your tenant one month’s notice. 

Note that the repossession of living space also covers your family if you wish to have your children live in one of the units, for example.

There are some advantages and disadvantages to being an owner-occupant that you should consider before you take the plunge. Let's look at them more closely to see what’s involved.

The benefits of being an owner-occupant

When you are an owner-occupant, the first benefit of residing in your income property is that you can see the need for renovations sooner rather than later.

This is an important advantage, especially in the case of a building or multiplex from which you wish to draw an income. An ounce of prevention is worth a pound of cure! 

The main appeal to being an owner-occupant is that you can live in your multiplex and pay your mortgage with the income from the available unit(s).

Good financial planning can even allow you to allocate the rental income to pay your mortgage in full over time, leaving you only with expenses such as renovations or municipal property and school taxes.

Some of the expenses you incur as a rental property owner are tax deductible in Quebec. Take the time to find out more, because this tax advantage can be quite significant!

Owner-occupancy: disadvantages

Being an owner-occupant also comes with its share of obligations to consider before taking the plunge. With proper preparation, many of these constraints can be managed well.

First, you will have to live with the fact that you have tenants. That extra income will have to come from somewhere!

What we mean is that some of the benefits of owning a home are not so easily accessible when you are an owner-occupant.

One of the things that comes to mind is the privacy or intimacy that comes with having your own space, as opposed to rental properties, where you'll naturally be closer to your tenants.

Let's talk about this proximity: being an owner-occupant represents the double-edged sword of living closer to your tenants.

You may be in a better position to oversee the condition of your building, but your tenants will know exactly where to go if they have a problem with their unit! This is fine, but sometimes abuses can occur without a clear framework.

Passive income… is it really?

The idea that being an owner-occupant allows you to generate passive income is very appealing, but this additional income still comes with its share of work. 

If you're a forward-thinking person, you'll be able to generate a good income, but it should be considered more as a supplemental income than as your main source of income, especially at the beginning of your project.

Earlier we mentioned the issue of proximity to the tenants. A lot of the work comes from that, and you need to be aware of that before you start.

In your rules covering your premises, set clear hours during which your tenants can visit or call you, but still leave a door open for emergencies.

A lot of points have been covered in this article: let's take a moment to review them:

Vistoo displays multiplexes ready for your owner-occupied project. Check out our inventory to find your ideal multiplex now!