Transaction Mechanics
Owner-User
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Also called: owner occupant · owner-occupied
Owner-users typically qualify for financing structures unavailable to pure investors — SBA 504 and 7(a) loans, in particular, require owner-occupancy of a defined majority of the building's square footage (generally 51%+ for existing buildings) and offer lower down payments and longer amortization than conventional commercial mortgage financing.
Owner-user diligence emphasizes operational fit over investment metrics: ceiling height and column spacing for an industrial user, parking ratio and visibility for a retail user, power and HVAC capacity for a specialized use — the analysis centers on whether the building works for the buyer's operations, not on cap rate or tenant credit.
Owner-users are also a distinct buyer pool that sellers should market to directly, since an owner-user's underwriting (avoided rent, operational value) can support pricing that a pure investment buyer underwriting to market cap rates would not.
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Terms that travel with this one
- Due DiligenceThe contractual period after an offer is accepted during which a buyer investigates a property's physical, financial, legal, and regulatory condition before the purchase becomes non-contingent.
- LOI (Letter of Intent)A non-binding document outlining the proposed key terms of a transaction — price, structure, due diligence period, and timeline — used to establish agreement in principle before drafting a full purchase agreement or lease.
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