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In my quest for extreme early retirement I've thought about possibly moving from my 2 storey home with undeveloped basement (paid off) into a smaller home that has an inlaw suite for the same price. I could get around $10K a year from a set up like this. $10K a year at a 4% SWR translates to needing $250,000 less of a nest egg to retire. A significant amount for anyone - and this would let me retire about three years earlier. Just wondering if others have an inlaw suite that they rent out and if this allowed them to retire early? Or conversely is this used to simply offset your mortgage payments? Just wondering what your rationale is for this kind of setup. I know many people do this - I know one guy who rents his basement out and two bedrooms on the main floor to total strangers. In total he's bringing in $2400 a month in rent.
 

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I would check on the zoning for your property to legally do that first.

If ok then I would make sure it gets legally done also. (drywalled ceilings, legal sized windows and such)

My rationale for doing this personally would be, does my home have a separate entrance that would allow for this, does zoning allow for it, how much would the reno cost compared to what it would bring in, would I miss using the basement area/driveway space for another car?
 

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I would check on the zoning for your property to legally do that first.

If ok then I would make sure it gets legally done also. (drywalled ceilings, legal sized windows and such)

My rationale for doing this personally would be, does my home have a separate entrance that would allow for this, does zoning allow for it, how much would the reno cost compared to what it would bring in, would I miss using the basement area/driveway space for another car?
I think the idea is more that he is looking to buy a house where this is already done. Really how I read it he's looking for a duplex that he can buy and will live in part.
 

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I have a house with an in-law suite that I used to rent out. I now house my home office down there.

The problem is that when you rent your suite out usually you will end up paying more utilities. This offsets your rent collected.

The second problem is that basement apartments are not attractive to the best renters. To have a good landlording experience the quality of the tenants is crucial.

So if you are going to buy a house with an inlaw suite make sure it is an above ground one. You will get more rent for the same outlay of utilities and attract better renters.
 

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Not sure what the keyword is look for multiple kitchens.

I have a one bedroom 2nd floor apartment near the Danforth I'm renting for $1200 right now. I have rented this place for about 5 years now.

I have another one I just rented near Queen Street I rented that one for $1150

So if you compare to your average basement where you'll get 800$ it's considerable but your costs are no higher, your tenants are better and the extra $$$ is pure gravy
 

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Thanks! I completely understand the financial argument. It's just that my parents did float the idea of getting a house with me similar to what is being described here. When they first mentioned it it had been my impression that such places were very rare. And I for one have NO interest in living in any basement apartment. I'm actually cool to the idea of living in the same place, quite frankly, but I'm speaking up now to try and get a better idea of what to look for to be able to spot such places.

It's just information and understanding really. I'll check for multiple kitchens.
 

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Maybe a different angle on this --

I live in a reasonably nice neighbourhood, and there's a pretty nice house for sale down the road. The owners have converted the basement into an inlaw suite, complete with kitchen, bathroom, separate entrance, etc.

This house has been on the market for months, has open houses every weekend, and just doesn't appear to be selling. It was originally listed at $549, but over time, has dropped to $429 (a steal, I think). My wife and I think that the reason they're having a hard time selling isn't because of the price range or market, but because the inlaw suite narrows the range of potential buyers quite substantially. (We suspect that people, like us, don't want to buy a house and then have to go to the hassle of "unconverting" the basement kitchen into a more single-family-appropriate environment.)

So ... it's basically a question of what suits a particular neighbourhood. This may be a consideration for you in the future when it comes time to sell.


K.
 

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I'm not sure if this is relevant, since I'm in Vancouver, but almost everyone here has or is allowed to have a basement suite. We have had our house for 10 years and have had the suite rented out almost the whole time. It definitely adds extra work (maintenance) and increases your utility costs, but overall, we make extra money that helps with the mortgage.
 

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In my quest for extreme early retirement I've thought about possibly moving from my 2 storey home with undeveloped basement (paid off) into a smaller home that has an inlaw suite for the same price. I could get around $10K a year from a set up like this. $10K a year at a 4% SWR translates to needing $250,000 less of a nest egg to retire. A significant amount for anyone - and this would let me retire about three years earlier. Just wondering if others have an inlaw suite that they rent out and if this allowed them to retire early? Or conversely is this used to simply offset your mortgage payments? Just wondering what your rationale is for this kind of setup. I know many people do this - I know one guy who rents his basement out and two bedrooms on the main floor to total strangers. In total he's bringing in $2400 a month in rent.
The only concern I'd have is an inlaw suite and a legal basement apartment are different (as far as I know). You want to make sure that you can rent it legally to a stranger, otherwise you can have problems if you're brought to the landlord tenant tribunal.
 

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Exactly, it only takes one neighbour to complain because there seem to be too many cars are people coming and going from your house.

Make sure its legal! (comply with zoning and fire safety rules)
 

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I bought a new house with a legal suite a few months ago but when i negotiated i was able to get the builder to put in two meters and two hot water tanks so the only expense of the tenants i have to worry about is extra water/sewer/garbage that the city charges for having a suite. I live in the basement and rent out the main floor which almost covers my entire mortgage. You were saying that you currently have a house with an unfinished basement? If that's the case then i would considered converting that space into a suite (if its possible).
 

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I recently purchased a new home with a legal suite. When i was negotiating with the builder i got him to put in two hydro meters and two hot water tanks. Makes it almost like a duplex. I live in the basement and rent out the main floor which almost pays for my entire mortgage. You can always finish your unfinished basement into a suite. I'm not sure were you live but were i'm from you can convert basements into authorized suites which means they cannot be shut down if someone complains. Talk to your city and they should have any questions you have.
 

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I have a basement suite in my house and I love it. I waited to buy a house until one came on the market with a suite. I live in a small town, so I get $650 per month rent for mine, with my mortgage payment being at $420 bi-weekly. So it covers the majority of my mortgage anyway, and would cover close to the whole thing if I had a traditional 25 year amortization.

I echo the warnings of the other posters of making sure zoning is okay. My neighbors haven't said a word to me about having renters, if they did I would just claim I have a roommate.

I've gotten great renters and 1 not so good renter. I've never had to advertise it for any longer than a week before someone took it. Typically, I have 2 or 3 interested and get to pick. Maybe I should put up the rent.
 
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