We all need a little help in the area of finances, do not we? Why not begin by having someone else pay your mortgage? Yes, you will need to give up some square footage, but imagine all that extra cash you will have each month! Let's look at what is involved in adding a mortgage helper to your home.
Depending on the layout of your house, you may have an area that is already ideal for converting into a rental suite. Perhaps, there is a downstairs recreation room that is no longer used. Perhaps, you like the idea of enclosing the garage or area under your large deck. Try to visualize the space. See if it could work in terms of electrical, plumbing, separate entry, privacy and insulation. Not all houses are suited to include income suites. The ceiling may be too low (6 feet minimum); There may be a staircase right in the middle of the area making a renovation awkward and more expensive; Or sometimes there is no separate entry. Typically, the finished space should be no less than 500 square feet. Smaller is possible but you will not be able to get as much rent and the layout may be awkward. Other factors to consider are things like parking, electrical voltage and plumbing. Is there off-street parking for your tenants? If not, will they need a permit to park on the street? Is the electrical voltage enough for an additional household? Will the plumbing hold up to the addition of another bathroom and kitchen? Do you need to replace the hot water tank with something larger?
You may want to consult reputable contractors, who have experience constructing rental suites. They will always have good ideas and input about your unique situation. Getting an estimate and asking their advice can be done before or after the decision to renew, but make sure you are serious. Do not waste their time if you are just curious. Check what permits will be needed to complete the revision and what the approval process entails. There is usually a fee for a building permit, but very often you get it back when the work has passed inspection.
Now it is time to crunch the numbers. Get quotes from electricians, plumbers, contractors and other trades. Price out mid-range fixtures, flooring and any other supplies you may need. Do a little research on the rental market. Look into what the rentals of the same approximate size in your area are going for. Take into account whether the rent includes furnishings, utilities, internet, phone, cable and laundry facilities. Be realistic about what you could get for your suite when it is finished. Then add up all the costs of doing the renovation, calculating how long it will take to recover your costs. Some experts believe two years is a good benchmark for making your money back. For example, if the renovation is expected to cost $ 12,000 and you charge $ 500 a month in rent, it will take two years to make your $ 12,000 back. If the numbers look good, then it is time to delve into the world of rental suites.
Whether you choose to use a contractor and sub trades, or manage the job yourself, it is important to watch and learn what is being done. It is your home, you are entitled to know why a sub-panel is being installed or how the plumbing is being routed. These are vital pieces of information if something should happen when the suite is occupied and you need to troubleshoot. If you are a nice kind of person, take on as much of the job as you are able without overstepping your skill set. Should you see something you think is not quite right, do not be afraid to ask.
While construction is progressing, educate yourself on the rental laws in your area. Renting is a business so you have to know what your obligations are in running the business. You are responsible for your property, the safety of your tenants and the quiet enjoyment of their time in your suite. Tenants have responsibilities too. Your tenants are obliged to keep the space clean and in the same condition as when they began their tenancy. It is far easier to be a good landlord than a bad one. If you look after your property, make your tenants feel comfortable and are reasonable with their requests, they will not want to leave. If you do not look after your property and do not pay attention to your tenants requests, they will not look after your property either. The turnover will be higher, the suite will not be well cared for and you will not be able to charge as much rent.
There is a lot of gloom-mongers out there who say things like 'I could never share my home with a stranger' or 'tenants never look after their rental. They trash it '. First of all, if you treat someone living in your home as a stranger then you are not suited to be a landlord. The process of finding a suitable tenant – if done properly – means you will get to know your renter. Hopefully, you will build a rapport, sometimes even find some shared interests. They do not need to be your friend, but the more things both parties have in common the better the tenant / landlord relationship. As for the tenant that trashes the suite, yes – there are some that do disrespect the rental property to that extensive. But you can prevent it. Screen your tenants thoroughly. Check references, ask lots of questions about their habits, hobbies, work and social habits. If they baulk at your inquiries, maybe they know you will be an involvised landlord and their unclean habits will not be tolerated.
Having a rental suite in your home is not for everyone, but it can be a permanent way of alleviating the stress of large monthly mortgage payment. The investment is well worth it in the end.