HYBRID HOUSE?!
Many real estate investors have their Home, and their investment property(ies). Separate entities. But what if you combine the benefits of both? Literally we had just finished talking about this idea, when the first call came in to our reno company, “could you just ….” The concept is that you live in part of the house, and rent out part of the house.
COVID 19 is challenging all of us in different ways. Whether you already have another family living in your basement, or you are looking to create an extra source of income, legal suites can be a great way to decrease your living expenses and/or generate income.
Some couples will live humbly in their basement suite, and rent out the upstairs for a few years; they might start with a monthly mortgage payment of $2000, but have $1500 or more covered by the rental payment. We know of other families creating legal suites for their adult children to live in and start paying rent; it’s a great transition full of lessons about budgeting. And we know of some young people who intentionally buy a house with a “mortgage helper;” some banks will allow the extra income of a tenanted suite to be included when qualifying for a mortgage.
Here’s how it works:
- Make sure your house is zoned to have a legal suite (backyard suite, basement suite, secondary suite, or garden suite—doesn’t matter).
- Could you get a development permit even if the house isn’t zoned for a second legal suite?
- Contact your city/town to begin the permit process. And contact several people to provide quotes for the work that needs to be done. Make sure your contractor or renovator can get the necessary permits/licenses.
- Word to the wise: make sure everyone who is currently living there is on board with shared accommodation before you begin (happy wife, happy life, right?).
- How much space do you have, compared to how much rent can you get? Could you put in a 2 bedroom above garage suite? Or even a 3 bedroom basement suite (there are already lots of newly separated parents looking for accommodation due to COVID stresses).
- The basics: you’ll need a kitchen area, a living area, a bathroom, and bedrooms (unless it’s a bachelor suite). Everybody loves in-suite laundry, so try your best to figure this one out.
- The rules: each city/town will have different rules about heating, hot water tanks, windows, separate entrances, amenity spaces, and parking. Note of caution: in Calgary, parking spaces is a deal-breaker for getting your permits. Find out what the rules are, before you spend your hard-earned cash.
Calgary just extended their program that allows for illegal suites to be converted using fire code regulations, rather than full building code regulations. That’s a significant cost savings! Here’s a little more Calgary trivia: did you know that half-duplexes can also be legally suited now? Yup, it was a quiet little news story—that could have a dramatic impact on your bottom line as a real estate investor!
And if you’re thinking long term, you’ll have a lot more options to sell, rent, or joint venture your property with a legal suite. “Thinking outside the box” seems to be very much a part of the new normal—could this hybrid idea work for your family, finances or investment properties?
