Real estate investing can be absolutely beautiful! One of the easiest ways to buy a home and get someone else to make your mortgage payments is to invest in a home with a profitable basement. You can ask a real estate agent to search the market for you. Be prepared, some basement units are total dives. Some could be beautiful with a paint and flooring change, and some are already very renter-friendly. If you are a handyman / female it can be very satisfying to take an unusable or ugly space and transform it into something that tenants would be happy to call home.
There are a few things to keep in mind when purchasing a suite home. These suites are generally classified as “in-laws suites” or “summer kitchens.” Very often that means they are not zoned for two families, and you will have to decide if you want to proceed with your purchase.
Not all homes with suites are suitable for rent. Naturally, your tenants will need a kitchen and a bathroom with a bathtub or shower. You will need to have a separate entrance for your tenants and there will need to be adequate parking space. It is easier to rent a suite that has lots of windows and natural light. Laundry rooms are often in the basement, so unless you want to put in a separate laundry room, you will have to have access to both without invading each other’s space. Sometimes it is quite easy to reconfigure the space to address some of these issues, by moving or adding doors. If you don’t have the knowledge to decide if these types of renovations are possible, bring someone who can advise you. Here are some things that tenants look for when choosing a rental unit:
– Independent, safe and well-lit entrance
– Adequate parking nearby
– Clean and bright living spaces
– No musty odors
– No mold or mildew
– Quiet neighbors upstairs and adequate sound barriers
– Easy access to the ground floor.
– Accessible
– Outdoor space
It is very important that you familiarize yourself with the Landlord and Tenant Law in your province. Regulations differ a lot from one to another, and some provinces act a lot in favor of tenants, so if things don’t work out, you may regret not having properly vetted your tenant.
How much can I charge?
The best way to find out what the suites are rented for is to pretend that you are looking for a place for yourself. Look online and in the newspapers. If you want to see how other places compare to yours, make an appointment to see some of the competition. You do not need to tell them why it is there. You should be able to have a pretty good idea of how much the suites are rented out.
Advertising your suite
Many people advertise on free websites like Kijiji, Craigslist, or more local sites. Take some photos of the best features in your suite, make sure they look clear and bright, and you should get some interested potential tenants. Newspaper ads can be expensive, but people still read search ads when looking for something in particular.
Tenant detection
Many landlords will ask prospective tenants to fill out an application form. It is very important to check the references provided. Be sure to call the employer to verify that this tenant is employed and for how long. Call the previous landlord. That is a very good way to know if the tenant always paid their rent on time, if they left the previous suite in good condition, and if their behaviors and habits were legal and discreet.
If you want, you can also do a credit check on your applicant. Here is a link: http://www.ataireverification.com. There is a cost for this service.
Nobody wants to get stuck with the tenant from hell. It is important that you know your rights as a landlord and understand the eviction process; however, it is wiser to select the right tenant from the beginning.
Signing of the lease.
Standard leases are available free of charge from the Landlord and Tenant Office and are available online. Follow the links above to your province’s website. Be sure to make two copies, one for the tenant and one for yourself. Once your tenant is ready to move in, you can use the website to find a Moving / Moving Inspection Report. It is very important to go through the rental suite with the tenant to document the condition before they move in so that if there is damage that occurs during occupancy, you will have a record of the previous condition. You can also take dated photographs to document the condition of your suite.
How much is the deposit?
Generally, you can only charge half a month’s rent, but some provinces, like Ontario, have different regulations. You can often charge an additional deposit if you are allowing pets.
Who pays for the utilities?
There are a number of ways that homeowners handle this. Some landlords share the cost of utilities 50/50. Other owners calculate the percentage by the number of people in each part of the house. Some landlords include the cost of utilities in the rent. (Note that renters can take advantage of this. They can turn up the heat and open the windows in the winter to get some fresh air, for example, or take forever showers.) Make sure you have a written agreement.
Other things to consider
If you are the type of person who must have absolute peace and quiet, want to be left alone, and consider your home a haven from the mad world, then probably renting a basement suite is not for you. Many people will find it a bit unsettling to have tenants. You could be the type of person who has little patience if you find that having tenants disrupts your daily life. But for many other people, it is worth the hassle. Before you spend money on renovations, you need to decide whether or not you are willing to put up with the occasional added stress or annoyance. Choosing the right tenant is key to making this a positive experience.
If you enjoy the feeling of financial freedom by letting someone else pay for your home, becoming a homeowner is relatively easy and can be very enjoyable. Do some research, possibly make a few changes to your home, and spend a little time finding the right tenant, and you will be very pleased with the result.
