I am thinking about buying this property with 2 units. I would live in one and rent out the other. Would this arrangement qualify as owner occupied and can I own the property under a S corporation? Thanks for answering my question.

Andy:

This is a case of an easy question having an answer that is more complicated that it seems.

Would this arrangement qualify as owner occupied?
For the purposes of someone like me {a commercial credit analyst} Yes! this is an owner occupied property. In my case, we are looking at the use and it is fairly common to see a company occupying a building and the building being owned by another related entity {the owners or another company owned by the same people used for holding the real estate}. I would also suspect that this will be the case for a residential mortgage. It is my understanding that you can buy a multi-family property of up to 4 units under either a conventional or an FHA residential loan {don’t quote me on that ”I am not a residential lender”}

can I own the property under a S corporation?
Yes, but by doing so you might not qualify for the good “residential mortgage rate” that you could qualify for if you went with a purely residential deal. "talk to a residential lender about this". There is very little chance that an ”investor” could get the kind of rates that you can get in the mortgage market right now. You can also forget about buying the property with less than a sizable downpayment.

While owning the property yourself and renting it will leave you exposed to some liability, there are steps that can be taken to minimize it. Millions of people are landlords, it is not that difficult, and you will only be dealing with one tenant, so that is a plus.


Good luck and hope this helps.

Thank you. It absolutely helps. This is a wonderful site you have.