Income Producing Suites
Income Producing Suites
We’ve all seen the T.V. shows where a basement is beautifully converted into a great apartment and the homeowners rent it out for top $ and the renovators is a hero and rides off into the sunset.
Many 1st Time Home-Buyers look to the idea of an accessory apartment in their homes to help supplement their incomes and/or offset the expense of owning a home. We have taken many new buyers around with a view to either having accessory apartments or being able to convert a part of the new home to an apartment.
There are Pros and Cons to be aware of but first, what is an accessory apartment.
The Ontario government defines them as Second Units and are commonly referred to as accessory, basement, secondary, in-law, granny, nanny…. and are self-contained residential units with kitchen and bathroom facilities within dwelling or within structures accessory to dwellings, such as above the garage, see http://www.mah.gov.on.ca/Page9575.aspx Legally there are many restrictions both in the construction and the rental.
In addition to the Ontario Government, each municipality will have their own guidelines and approval processes. You can find the guidelines for Georgina by clicking http://www.georgina.ca/planning-aap.aspx.
- The most obvious is the rental income. In Georgina the rent for an accessory apartments varies considerably by size, basement/main level/upper, amenities provided, inclusions and, of course, location. Often they can cover more than half of the cost of your mortgage (just make sure that you can afford your mortgage if you are ever without a tenant).
- Security. If you have a good tenant or a family member using the apartment, there is always the sense of having another person in the house and watching over your property, particularly if you are away.
- The biggest con that I have encountered with the accessory apartment is the “bad tenant” but more about that later.
- Cost of construction and/or retrofit, permits and inspections.
- A stranger in your house. Even if you have a great tenant or a family member, there is always a reduced sense of privacy and if not constructed properly you may be able to hear everything your tenant does and your tenant will hear everything you do.
- Legalities and Liability. There are many legal implications involved from the Residential Tenancy Act, http://www.mah.gov.on.ca/Page137.aspx to insurance implications.
Why should you Build a Legal Apartment?
The Town will have all their reasons why an accessory apartment needs to be built to Code, be inspected etc. but what is in it for you? After all, it is going to cost much more to make it legal then just build it, even you hire professionals for the construction.
All I can say is CYA, cover your ass. Negligence and lawsuits. If your apartment is built to Code and meets standards should anything happen to your tenant or your tenants possessions you will have more options. I strongly encourage speaking to a lawyer and insurance companies with respect to liability so that this decision is made with wide open eyes.
The second reason if you just construct it without going through the proper channels, make sure you get along with your neighbours. If something causes them to complain and the Town investigates, there can be further repercussions.
In conclusion, an accessory apartment can certainly help with making the dream of buying your 1st home a realty but please do this with foresight and planning. I don’t hold myself out as an expert these matters and I strongly recommend that research and expert advice is sought out in the area which you choose to buy.