Owner occupied house hack vs Investment Propery

Raleigh, North Carolina
House Hacking
9moFollow

Owner occupied house hack vs Investment Propery

Joel Duhon
Member since 2025 · 1 post · 0 votes

I have two sons in college and am looking to buy a place for them to live in (with roommate(s)). I'm trying to decide whether to go the Owner occupied house hack route or purchase an investment property.

I can go the Owner occupied route by having one of my sons on the mortgage and take advantage of the lower down payment and better interest rate. Or I can go the investment property route and take advantage of the tax deductions and depreciation.

I have the cash available for the larger down payment.  

I'm leaning towards the house hack model as the rental income won't be high enough while my sons are living there to generate a large tax liability. Are there any other advantages/disadvantages that I should be considering?

0Reply
139 views

5 Replies

Jump to latestLatest
  • Jason WrayPro Member
    Banker · Nationwide · Member since 2020 · 2k+ posts · 1k+ votes
    9mo

    Joel,

    One thing to keep in mind is as of January 1st there are some new programs that allow as little as 10% down on a investment home purchase (single family, condo or townhome).  You need to qualify with income and good good credit but it does help on the pockets.  If it's a 2-4 unit it requires 15% down.

    If you buy as an investment you get the benefit of the scheduel E deductions and can still add your son to title.  If you plan to give it to him down the road its already set up as an investment and can be held in an llc.  That also removes the burden or risk if there is an injury on the property they cannot come after your personal assets, cash or primary home.

    I had an investor do this last month for his two daughters and his CPA said best choice for personal taxes and to offset his W2 and 1099 SE income.  If you have any questions feel free to reach out check out my profile or send me an email.  Always happy to offer advice, tips or loopholes to other Bigger Pocket members and other Dad's of the world.

    [email protected]727-637-4289
    0Reply
  • Wale LawalBusiness Member
    Real Estate Broker · Houston | Dallas | Austin, TX · Member since 2018 · 5k+ posts · 2k+ votes
    9mo

    @Joel Duhon

    It sounds like you are on the right track! An owner occupied house hack really makes sense in your situation. The best parts are the smaller down payment, better interest rate and easier cash flow while your sons are living there. Plus you can always turn it into a full rental property later and take advantage of depreciation when rents go up. The only real downside is that you might not have as much freedom at first, because of occupancy rules and how you set up ownership. So it is a good idea to plan your exit and tax strategy with your lender and a CPA early on.

    Good luck!

    [email protected]832-776-9582Podcast Guest on Show #469
    NETWORTH BUILDERS5236 Reviews
    WebsiteView Page
    0Reply
  • Mohammed Rahman
    Real Estate Broker · New York, NY · Member since 2020 · 2k+ posts · 1k+ votes
    9mo

    Hi Joel,

    The house‑hack setup with your son on the loan usually lines up better with both financing and practical goals than treating this as a pure investment property while they’re in school.

    Compared to the alternative, house hacking means (1) cheaper financing, so you can keep more cash for reserves, repairs, etc. (2) future exit option of converting the property to a full rental.

    0Reply
  • Laura Shinkle
    Realtor · Charlotte, NC · Member since 2017 · 359 posts · 293 votes
    9mo

    Hey @Joel Duhon, that's amazing that you're willing and able to do that for them. 

    On the surface, the owner occupied route seems the better options with lower interest rate. If you have the cash and still have enough in reserves, you can also put more down in order to get better cash flow/lower PITI. Best of both worlds.

    If you have a CPA I'd ask them their opinion on the pros/cons of the investment property. Since they know your tax liabilities best. 

    Talking with a lender can also help. If you're both on the loan, your son's credit (presumably not as good as yours given his age) may offset the pros of the owner occupied loan. Your lender can run the application with both of you and just you to see what the numbers should look like to help you make the decision as well. 

    Lastly, I'd make sure you're clear about ownership and exit strategies if you do put your son on title/mortgage. Are all expenses/maintenance going to be on you? Does that change over time? Are you going to sell after he graduates or hold on to it as a rental long term? 

    Good luck!

    0Reply
  • Josh CaldonPro Member
    Albany, Albany County · Member since 2026 · 1 post · 0 votes
    6d

    Hi Joel,

    I'm looking to do a similar thing with my son. What have you learned? The loan originator I am working with thinks its better for me to buy the house myself as an investor property, especially as I intend to put it in an LLC.

    Josh

    0Reply
Join the conversationCreate a free account to reply, vote on answers and follow this thread.
Log InJoin for Free