Benefits of Single Detached Houses with Secondary Income Suites

I can appreciate that not everyone wants to be a landlord. However, the reality in this current market, is that a single detached house with an income suite is the easiest way to leverage out of a condo or townhouse and into a standalone home.

There has been a huge increase in homes with separate income suites on the market. This speaks loudly to our current housing affordability situation.  It also shows the strong desire that people still have to be able to own their own detached home. Here are some distinct advantages to being in a detached home by bridging the gap with a secondary suite. 

1. No More Strata – You might love your neighbours but I am not sure you love being in business with them. The reality of a Strata is often not as romantic as it first seemed. There are a lot of cooks in the kitchen and getting a large complex to all agree can be nearly impossible. If you are tired of the arguments, negotiations, monthly strata payment and lack of personal control it may be time to consider a standalone house.

2. Requiring Less to Qualify – Understandably the bridge between a townhouse or condo and a single detached house can be significant. The additional money needed to fund the purchase might be daunting. When purchasing a home with an income suite, the potential rental income is factored into the mortgage qualification and added to your income. What this means is that you will need less to qualify. Depending on the lender they may add up to 90% of the rental income into the equation.

This case study example provided by Keegan Cassidy of The Mortgage Group

Rather than needing $200k to qualify for a $1 million dollar mortgage, with the addition of the rental suite, the borrower only needs to earn $132.5k per year in household income. Please note these numbers change depending on interest rates but the general concept remains. Revenue from a secondary suite equals needing less to qualify

3.Space to grow – Secondary suites provide options. You may need the income now to pay the mortgage but down the road you may decide to use the suite for a multitude of different possibilities. These suites are fantastic for live in nanny’s, grandparents who are downsizing and would like to be closer to family, providing a safe and affordable space for a loved one who is ill, a teenager hang out and media room, additional guest accommodations, or possibly a way to transition a teen into a young adult by providing the space for them to learn to live on their own.  

It also does not have to be all or nothing. You can get creative. If you need some of the additional space but not all of it, possibly consider renting a room in the basement. If you have a local college or university near your home, affordable housing is always needed for students. Room rentals can go from $600 - $800 per month and can often be tax free.

4. Passive income for retirement – We are not often thinking this far down the road. Sadly most people will need to sell their primary residence and downsize at retirement. The cost of keeping the house without earning income from a job can become too expensive. A bonus for homes with income suites is that you can go back to renting out the suite. The passive income earned offsets the cost of property taxes and utilities and can sometimes be the deciding factor of whether or not you can stay in the home that you love for your golden years.

5. Cost of moving – Moving is expensive. By the time you add in property transfer taxes, real estate commissions, lawyers and movers these costs can be high. By purchasing a home with a secondary income suite you can have all of the options that you need for many years to come and help limit the number of moves you make in your lifetime.

If these concepts make sense to you, it may be time to consider the plunge. With over 20 years of experience in single detached homes with secondary suites, I specialize in properties with purpose. Have a look at the 'Properties' tab of my website to find single detached homes with suites currently on the market in North Vancouver.
Give me a call to start your search today. 

Congratulations! You own a home with a rental suite! Maybe you have recently upgraded from a condo or townhouse or possibly you have added the suite for extra passive income. If being a landlord is new to you, you may be a bit nervous about finding the right tenant. 

Renting a suite which is located within your own home is understandably a bit of a different beast. Even though the unit is separate, there is an element of shared space. Whether that is shared laundry, utilities, outdoor space, an awareness of sounds coming from your vents or just running into each other as you come and go.

You will want to put in the added effort to ensure that you find the right fit for your home and for your family.

Here are 5 of my top tips to get you started.

1. ADVERTISING

Be specific with the advertising and expectations – the more specific you are the clearer the expectations. This is your home. You set the rules. Aside from the typical, quiet, respectful tenant, no smoking/vaping, no pets - be clear with what you are offering and what you are looking for in a tenant.

Don’t have room in the driveway – street parking only,
Don’t want to share your backyard – no outdoor space,
Concerned that your dog and kids will be too loud – owners are a young family who live upstairs and cannot guarantee an abundance of quiet.

The clearer the expectations the less complaints you will receive. There is no template. Lay all your cards on the table and be transparent. If they don’t agree with your terms then they are not the applicant for you.

Disclaimer * -Please note - As a landlord you cannot discriminate.

From the Government of BC website -
‘A landlord cannot refuse to rent to a tenant based on their race, colour, ancestry, place of origin, religion, marital status, family status, physical or mental disability, gender, sexual orientation, age or lawful source of income.’

Ensure that any advertising criteria stays well away from Human Rights requirements.

2. PRICING

Set your price on the lower end of the price range to entice more applicants – I know you want to get top dollar and depending on the rental market you might. If however, you would like a number of candidates to choose from so that you feel you can make the best choice for your home and for your family then make your price very competitive.

More applicants = more choice. The better choice you make up front the less headaches. Finding an excellent tenant is worth its weight in gold. Also if they realize they are getting a good deal they will respect your expectations and potentially stay longer.

3. THE INTERVIEW

Keep them talking.
When you book showings for potential tenants don’t cut your timing short. The key is to keep them talking. You will be surprised what you will learn and what they are willing to tell you if you chat them up. Hand them the tenant application during the showing with a pen. This way they sit down and start to fill it out if they are interested in applying.

This is just as much an interview as it is a showing. Ask them about themselves, why they are moving, what they liked or disliked about their last place and get to know them. If possible have a second person with you during the showing. They will offer a different approach to the questions and they will also get a sense of whether the applicant would be a good fit.

4. THE INTERVIEW EXIT

After the Interview, walk them to their car – full disclosure, I read this one in a book. Believe it or not, the condition of someone’s interior of their car is a very good indication of how they will treat your suite. Think of your own car, is it approximately the same cleanliness of how you keep your house? Most very clean people have a very clean car. The reverse is also true. Walk them to their car at the end of the interview to thank them for coming and take a peek. You will be glad you did.

5. REFERENCES

Check their references, employers and social media – Always. Make sure you speak with people directly. Call them, don’t email them. The trick to references is often what they don’t say. Read between the lines. Ask if they would ever have them back as a tenant. If they hesitate or skirt around your questions you may need to pass.

Make sure you not only get a previous landlord reference but also a job reference. Find out how they are as an employee. Are they respectful, on time, professional and trustworthy? These are personality traits that will cross over to being an excellent tenant.

Lastly, check their social media. I realize that no one wants to feel like a creeper. Social media is however a public platform that you can verify. The smart applicants will have private accounts however a surprising number of people still have open accounts that you can view. Just know that this tip goes both ways and be prepared to have your social creeped as well while they are deciding if you would make a good landlord.

BONUS TIP

A lot of landlords are nervous about young tenants. I understand the concerns. I will say however that in my experience young tenants have been terrific. These are young adult’s age 18 – 20 who are leaving their family home for the first time. Typically the parents are highly engaged and will often email on behalf of their children to help them apply. Connecting with the parents provides an extra layer of accountability.

Young tenants tend to be less demanding. My guess is that they don’t know what to ask for and they are just so happy to be out on their own that they don’t dare complain. They also tend to be quite respectful. I always refer to ourselves as their ‘upstairs family’. This creates an extra level of rapport and they know they have an extra set of parents around if they ever need.