September 2018 – Second Suite

Suite Showcase: Tour Our First Suite

We built our first basement suite the fall of 2014, and moved in just before Christmas. I like to think of it as “my dream basement suite” and we lived there happily for two years. Let me show you around!

Before you even step foot into the suite, there is a large patio that offers great outdoor living space for the downstairs tenants. And look at that huge window! No, it does not feel like living in a basement.

Yes, this space is small! You can see pretty much all of it when you stand at the front door. All done, it’s around 620 sq. ft. and we planned and designed every inch of space to be as effective as possible. Although it’s “cozy,” it’s comfortable and still feels spacious.

There is a small closet next to the entry which offers enough storage for coats and shoes. That’s something I love about this place, there is a surprising amount of storage.

Kitchen

Aaaah, the kitchen. Look at all that cupboard space! And cabinets that go up to the ceiling – luxury. Seriously, this is an amazing kitchen. We chose materials that were timeless and simple as well as affordable and durable.

We chose a counter depth refrigerator since the kitchen is quite narrow. A regular fridge would have stuck out an extra 6-8 inches beyond the 24″ deep bottom cabinets and we just couldn’t afford to lose the floor space. Not to mention it would have made opening the oven door really squishy.

Notice all the drawers! There are two banks of three 24″ wide drawers which is really dreamy. You don’t know how horrible storing pots and pans in a cupboard is until you have POTS AND PAN DRAWERS. I don’t know how anyone lives without them. We were able to squeeze quite a bit of counter space out of this kitchen and even a little spot for a stool at the end of the counter on the left side. Perfect for a quick breakfast, making a grocery list, or sitting and chatting with whoever is making dinner.

There is a tall narrow bank of cupboards on the other side of the fridge that offers additional storage. It’s as deep as the cupboard over the fridge and perfect for a food pantry.

Heres the view from the back of the kitchen looking towards the door (in the bathroom doorways). We chose a door that had a big window in it to allow even more light into the space. I think that is really the key to any basement suite feeling like more than just a basement – natural light! Wherever possible, add a window, or a bigger window to let in more light.

For privacy we made sure the door’s window had an adjustable blind between the panes like this. A window with frosted glass also would have worked.

You can also see how much furniture we were able to fit into the space and it still feel usable and not too cluttered.

Bathroom

The bathroom. Again, lots of storage and utility crammed into a tiny footprint. The large mirror over the vanity helps open up the room and all the white keeps it so clean and airy. We also put lights over the vanity as well as in the ceiling to add as much light as possible.

Because there is very little wall space, we put towel bars on both of the doors (one leads into the common space/utility room). It was fun being creative with how to include some of necessary elements into the room when we didn’t have regular space to work with. The shelving we had built for behind the door acted as a linen closet and held towels, toilet paper, and every other bathroom item you can imagine that didn’t fit in the vanity storage.

Bedroom

Our bedroom was small and simple but the 9′ ceiling, big window, and white paint made it feel bigger than it was. We were still able to fit night tables, and a small IKEA shoe cabinet at the end of our bed. We also chose a bed that has huge drawers in it to house all the extras. I don’t know if you can tell, but I like organizational

There is a small walk in closet with custom shelving that was built under the stairs leading to the upper suite. What did I say about being clever about using EVERY INCH we had? You’ll also notice a slightly haphazard chest of drawers peeking out on the left side of this photo. Although not perfect, it was another space saving idea we had. We cut a hole in the wall that led to the empty space beneath the stairs and shoved the dresser in there. It can be moved out of the way to access additional storage space for things like boxes and Christmas decorations.

Living Room

Here is a great shot of that big window and the 9′ ceilings in the main living space. The ledge along the far wall is from the concrete foundation and, instead of boxing it in and making the wall flat, we left it open to create the sense of more space. The ledges also add some interest and depth to an otherwise white box.

Here’s another view looking straight at the wall with the ledge. Although you can see that one thin wire hanging down from the TV, you’ll notice how most are hidden away. We used some PVC tubing in the framing behind the drywall to hide the cables from the TV to the game systems and other electronics that are stored on the shelving below. We had planned to place the TV above the ledge and didn’t want the mess of cables to deal with.

Across from the living room was open space that we weren’t sure how to use. When planning how wanted to use the suite, we were pretty conscious of all the stuff we already owned and what we wanted to keep out instead of put in storage. Our book collection needed a home, so we made “library” that also served as a desk and office area. The ledge fit in perfectly and added more shelving. The books also add so much colour and livens up the otherwise simple white space. It’s one of my favourite elements in the whole suite.

Well, there it is! There are millions of other little details I could go into about what elements we chose and why, but at least this gives you a peek into our first big project and gives you a sense of all you can do in a basement suite, even when there isn’t a lot of space to work with.

If you have any questions or would like to find out more about anything we shared with you in this post, don’t hesitate to get in touch!

I’ve included a simple floorplan of the space for you to reference.

The 5 Things Your Home Needs to Have Before You Suite It

You have thought about if a secondary suite is right for you and decided that you want to take the plunge, Congratulations! There are lots of great houses on the market, but not all of them will be great for adding a legal suite. You can of course look to buy a home that already has a suite in it, but most of these are not legal, and if you get reported by neighbours or tenants the city can shut you down. And those that are already legal can have a high price tag.

There are many homes that have the potential to become great income properties, and all it takes is a bit of research and a good eye to see a diamond in the rough. As you look for your perfect investment property or “house hack”, keep the following criteria in mind to make sure you set yourself up for success.

1. Your House is Properly Zoned for a Suite

In each city zoning regulations are a little bit different. Cities like Edmonton have it the simplest, where any residential property can contain a secondary suite. Calgary, Vancouver, and Toronto however need to be zoned in a specific sub-zone (ex; R1, RT-1) that allows for multi-family dwellings. The best thing you can do is search your cities website, or call their number to get the zoning criteria.

Knowing the proper zoning criteria can help you filter your searches for houses that fit within your cities guidelines. Many realtors have programs that will only show you houses with the proper zoning. You can also check websites like mls.ca to look for homes on your own in areas that you know have the right zoning.

If you are currently living in a home that you would like to suite but it is not zoned properly then all is still not lost. You can always apply for an exception through your city council. A lot of times this also involves connecting with your neighbours to get their approval of having a suite.

Some neighbours might not like the idea of having multifamily homes in their neighbourhoods. The Calgary Journal did some research on secondary suites that were appealed, and found that the top two reasons for neighbours appealing had to do with privacy concerns, and benchmark number 2…

2. Have Plenty of Parking

When you are looking to buy a home with a suite, parking is something that you need to take very seriously. We recommend making sure that there is at least parking available for 4 vehicles around or within your property lines. An example of this could be a lane home that has a parking pad on the back of the house that can house 2 cars, and street parking at the front of the house. Or a corner lot with a front facing garage and parking on the side of the house.

Parking is a really big deal, and if you want to keep your tenants and neighbours happy then make sure that the home that you buy has plenty of parking spaces. If the house you are looking at does not seem to have many parking spots then it is not a home worth purchasing, even if it has the proper zoning.

3. Needs a Separate Entrance

When looking for a home to add a suite into, having separate entrances are one of the simplest ways to decide if a house is worth viewing or not. Houses with walkout basement entrances are ideal, or homes that have a door that leads directly to stairs that take you to the basement work too.

That is not to say that having a single entrance never works however. If the entrance to a home can be separated into a common space with an inside door leading to the upstairs and another door leading to the suite downstairs then this could also work for you. However, if the only way to get to the basement is through stairs in the middle of the house then adding a basement suite is usually not worth doing.

You always can core out a door on the side of a house, but the costs of doing so are pretty high, and I would not recommend doing this on your first investment home.

4. Has Big Enough Windows in Basement Bedrooms

This is not just about providing natural light into a home. Safety is the name of the game when looking at windows. The main reason why there are so many regulations to follow is because Cities want to make sure that the places that people live in are safe. If a fire were to break out in the basement and a tenant was trapped in their room how would they get out? The windows of a bedroom have to be large enough for an adult to escape from.

Those regulations vary by small amounts from city to city, but a general rule of thumb is about 4 square feet or larger. If you look at a window and think “I can’t get out of that” then it is probably too small. Making windows larger is also an option, and it costs less than a door, but you may have to add window wells if you need to dig deeper.

5. The Mechanical Room is Accessible

This is actually less of an issue now in some major cities like Calgary, but in quite a few cities through out Canada your mechanical room (or at least the electrical panel) needs to be accessible for both upstairs and downstairs tenants. That means that if your mechanical room is located in an area in your basement that can not be easily turned into a common space then you will have to get it moved to a space that can be. This can be an absolute deal breaker for many homes.

Fortunately these rules seem to be changing. In Calgary, for example, so long as the basement suite tenant, and landlord, can access the mechanical room, all that you need to do is add a clause in your contract saying that you will access the mechanical room within 24 hours if requested by the upstairs tenant. This means that if a power breaker flips, your upstairs tenant needs to contact you or the basement tenant, and it has to be fixed by the next day. Inconvenient for the upstairs tenant, yes. But this change alone has meant that so many more homes have the potential to now be suited. This is amazing news for real estate investors, and a small price to pay in the long run if it means more legal suites in a growing city.

If you are unsure what the rules are for your city, the best thing to do is give the building and development department a call. They normally do not have this information readily available online.

To Sum it Up

Zoning, parking, entrances, windows, and mechanical rooms. This could sound like a big and scary list to remember as you are looking to find the right home to suite. It takes some pre-work to find the perfect home, but if you take the time to make sure your house can meet these requirements then you will have a more enjoyable suiting process.

Stick with Second-Suite to learn even more about suiting your homes, and as always feel free to share your stories in the comments bellow.

How Much Money Should You Put Towards a Down Payment of a Rental Property?

How Much Money Should You Put Towards a Down Payment of a Rental Property? When it comes to down payments there is no definitive answer on how much you should pay. How many properties you own, your current financial situation, and how close you are to retirement all have an impact on what decision you might make. In this post we will be looking at 3 different downpayment options, their pros and cons, and what we would recommend to you.

1. 20% Down Payment

This is the most popular downpayment option that many people choose when they are buying a home, as it is the minimum that you can put down without being considered a high-ratio mortgage. In fact, it is so common, that many new homeowners do not even realize that they can put down a percentage more or less than 20%. Although 20% is the standard, is it actually the right choice?

Pros

The biggest benefit is that you will not need to pay for mortgage insurance if you are at 20% or above (like CMHC) on your home.
Your monthly mortgage payments will be less than if you had a high-ratio mortgage.
Reduces risk if you can not pay back to loan or have to sell and housing prices have dropped.

Cons

There is a large upfront cost. 20% of a house is not affordable for everyone. Buying a $400,000 home means that you need to have $80,000 sitting around. This is a big challenge for first time home buyers.
That money is sitting in the house instead of being invested elsewhere.

2. 5% Down Payment

This is the lowest amount that you could put toward a mortgage (in most cases), and doing so put you in the category of a “high-ratio” mortgage. When you put less than 20% into a down payment you will need to get CMHC insurance (Genworth or AIG or also options, but their rates are usually worse). Basically, a premium is added on top op your mortgage

Here is the basic example; You buy a house for $300,000 and put 5% down ($15,000). For CHMC to insure your mortgage they require a 4% premium on the amount owed ($285,000). 4% of $285,000 is $11,400. This $11,400 is added to the mortgage total so your mortgage becomes $296,400. In this example you are adding an extra $38 a month to your mortgage payments. If you want to learn more about this the Government of Canada has an article all about it here.

So is it worth doing this?

Pros

You get into a home sooner. For many first time home owners, this is the only way to get into owning their first home in a reasonable time.
Instead of having that excess money sitting in your house, you could invest it in another property (or other wise investment).

Cons

CMHC is an added cost.
Only putting 5% down means that your mortgage payments will cost you more.
You have to live in the house (upstairs or downstairs suite) to be allowed to take advantage of the 5% down option. You can however move out of the home after a short period of time and still reap the 5% downpayment benefits.

3. Put as much as you can down

This option involves putting as much as you can into the down payment of your home (or just paying for the whole house in cash). For those of you who absolutely hate the feeling of being in debt then this could be a wise choice for you.

Pros

The more money you put down, the less interest you pay.
Your monthly mortgage payments will cost much less.
You will gain more monthly income from the house sooner.

Cons

The money that you have in the house in not being invested elsewhere.
Most people cannot afford to put a large lump sum of money into a home.

What is the right option for you?

The answer to this question ultimately depends on a few factors. Mainly being your current age, available funds, and your risk tolerance.

If you are a younger person, who has more tolerance to risk, I would recommend putting 5% into a downpayment. The CMHC, and higher monthly mortgage costs are there, but if you are investing in a home with a secondary suite, then your monthly mortgage cost sees a significant reduction. My wife and I were able to buy our first home in 2014 at 5% down, and were able to quickly save up and buy a second home in 2016 at 5% down as well. Our first home is now paying for itself, and we are paying only a third of the mortgage on the second house due to renters. Putting 5% down has allowed us to do more with our money, but it is not without its risks. If a tenant moves out, and the house is empty for a month or two, I have to foot the bill. So it is always worth while having an emergency fund on hand if you go down this route.

If you are looking to invest in homes later in your life, then I would recommend putting down as much as you can, and ultimately feel comfortable with. The goal for you is to get the homes paid off in 10-15 years instead of 25, so that you can use the income property as an income generator at, or before retirement.

Buying a house as a rental property is first an foremost an investment, and the most important thing is to think about what will give you the best value for your dollar.

Please share your thoughts in the comments below!