Many homeowners have questioned if they might turn an area of their home into a rental unit.
Of course the objective is to cut down your cost of housing by collecting rent from someone else. An arrangement like that can provide you with a bit of extra cash, or sometimes even make it feasible to make ongoing monthly payments which which could be very difficult without that extra income.
The first thing you should do is check municipal bylaws to see if building a rental unit like you have in mind can be approved within the existing bylaws. Each municipality is different.
Local fire regulations are usually the most difficult hurdle. Fire codes specify standards for electrical wiring, and the fire retardant characteristics of building materials. Regulations also define entrance and exit requirements as well as how many smoke alarms are needed and where they are to be placed.
To make sure your renovation meets all the requirements you are advised to get advice from a professional contractor with experience in this type of project. Hiring a professional to do it correctly may make it too costly. Just building a new entrance could cost up to $10,000, and building a unit having its own kitchen and bathroom could likely be as much as $30,000.
If the project is done according to code the upgrade will likely bump up the resale value of your home by at least 50% of the cost to do the work. The rental revenue can be substantial if you don’t sell the house for a number of years. For example, if you spend $20,000 creating a unit which you then rent out for $700 per month. Over a 10 year period your rental income will be more than $80,000.
Of course there are costs too, and there is the inconvenience of having a renter in part of your house. But if you proceed prudently and keep a careful check on your expenses you should earn enough income to justify the project after just two or three years.
More Resources: Bankrate.ca – Adding a rental unit to your home
Tags: add apartment, add rental unit, Home Improvements
May 5th, 2010 at 3:29 pm
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