The results are in and close to 25% of 850 BC real estate owners rent out a portion of their house to non-family members.
Do you fall in this category? Whether it’s a finished basement suite, converted garage studio or carriage house in the back, there are a number of ways to help finance your home with rental income.
This is a smart way to build your wealth faster and to buy into a more desirable neighborhood you might otherwise not be able to afford.
The most recent study mentioned above was conducted by Square One Insurance and seems to confirm a 2009 study that found between 23 – 27% of single family homes in the Vancouver have suites. The CEO of Square One Daniel Mirkovic isn’t surprised, stating that:
“The high percentage of people renting out a portion of their houses is understandable given today’s economy and the high price of real estate across the province.”
If this method of home ownership appeals to you here are a few points to consider before financing your mortgage through an in home suite’s rental income:
- Do the math. If you buy a home with a rental unit sit down and calculate how much sooner you can be mortgage free thanks to the extra rental income.
- Municipal Regulations and Laws. Follow the local laws regarding permits and zoning for your neighborhood so you don’t risk fines, lost rent and even issues with your mortgage provider. Does your home or potential home even allow for renters?
- Unique Selling Feature. Remember that about ¼ of people have rental suites. Make sure that your rental unit has an attractive feature (ex. large kitchen or private outdoor space). Even if you aren’t able to charge a premium for the unit you will likely be able to be choosier when it comes to selecting the perfect tenants.
- Limit your rental renovation costs. Most experts will suggest spending less than two years rental income on renovating a rental space. If you can rent the space for $1000/ month, don’t spend more than $24,000 on renovations.
- Added Responsibilities. Rental income does not come stress-free. The task of being a good landlord involves work. You will need to screen potential tenants, collect rent, make any repairs as needed as well as deal with any tension between families living in one building (ex. music, loud noises, parking and so on).
If you are considering rental property to finance your new home I can help you sift through Surrey, BC houses for sale with rental suites, or any other property for sale in BC with rental income potential.