Suite Showcase: Silverado – A Cautionary Tale of Illegal Suites

Introduction

Braydon Randall is a young entrepreneur and investor who had been interested in investing in real estate at a young age. He was born and raised in Vancouver, and began to work in trades as a crane operator. He was working up in Fort MacMurray where he learnt from friends that Calgary was (and still is) a great city for investment properties. Braydon found that investing in Calgary homes was a lot less expensive than it was to purchase a house in his hometown of Vancouver. 

• 

• 

In 2014, at the young age of 23 Braydon bought his first house in the SE of Calgary with the intention of adding a secondary suite to the home. The house is a 4 level split, which he found to be very simple to separate and suite. Working in the trades, Braydon had many friends with a wealth of experience which he was able to get their assistance on suiting his home.

Although Braydon worked hard to make sure his suite was well built, he took the advice from his father and decided to not go through the process of making the suite legal. This proved to be a costly mistake for Braydon as his next door neighbour invited Braydon over for a beer right as he was finishing his project and informed him that his wife and he did not feel comfortable having a renter for a neighbour.

They ended up reporting Braydon. He had to tell the renters that he had been in the house for less than a month that they would not longer be able to rent from him, and then had to go through the process of getting the city to inspect and approve all the work that was done (which is challenging and expensive once all the drywall is up). In the end, Braydon was able to get the suite up to Calgary and Alberta building codes, and now has easily one of the most beautiful legal secondary suites in the city.

Let this be a cautionary tale for all of you. When suiting your home, take the time to do it legally!

Related: Legal Basement Suites: Calgary – The First 4 Steps

• 

• 

• 

Q&A

Q: Was there anything in the process of suiting your home that was simpler than you thought it would be?

A: Nothing really comes to mind. For me the process was not an easy one as I had not originally gone down the legal route. I was really happy that I took a lot of pictures and documented the work that I was doing before hand, because I was able to use that to show the quality of the work to the city and the electrical and plumbing inspectors.

• 

• 

• 

Q: What happened when you were reported for having an illegal suite?

A: A month after I met with my neighbour I got a letter in the mail saying that there is a complaint and that they are coming to do an inspection on an illegal suite. At that time I had some tenants who had been in there for about a month. They were older, in their late 60s. So I had to kick them out. I had to remove the stove, I had to remove the dryer, and that is when the process started of having to get the building permits and developer permits.

Honestly, it feels like I pretty much got black listed from the city. The contractor that I ended up getting to help me after the fact, he has been doing secondary suites for like 20 years. He said that he had never seen the city make someone jump through so many hoops. It really felt like the city was doing this just to screw with us. 

Related: The Hidden Cost of Investment Properties

Q: Do you think the city made it so challenging for you because you had originally gone down the path of doing an illegal suite?

A: 100 percent. I believe that it was because I did it illegally, and then tried to get it done legally after the fact. I have gone to investment seminars and have talked to many people, and no one has had to deal the problems that I have.

As an aside: If what Braydon is saying about the city is true, this feels like a terrible way to treat someone who is trying to turn their suite legal. The Calgary is need of more affordable housing, and they want basement suites to become legal. Making the process difficult because someone originally went down the wrong path does not feel like the appropriate way to handle the problem.

• 

• 

Q: If you were to do it again would you start the process of going legal in the beginning?

A: Yes. I should not have done the illegal route. Deep down I wanted to do it legally, and I had a couple people, including my own father who influenced me in making the wrong decision. Making the suite illegal and then getting caught probably ended up costing me at least an extra fifteen thousand dollars that I did not need to spend.

Q: How much did it cost you to suite your basement?

A: In the end it costed me about eighty thousand dollars. Fifteen thousand of which I probably did not need to actually spend.

Q: How much money did you put towards the down payment of your home?

A: I was living in the house, and I decided to put five percent down when I bought the home. I wanted to put the least amount of money down on the home so that I could use that money instead to renovate and put renters in so that they can pay the mortgage instead.

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

Q: Is your rental property profitable?

A: Yes. I get the mortgage entirely paid off, I live in Vancouver now, so ten percent goes to the property manager, and I am ending up a few hundred dollars in the green every month even after that. 

Q: Are you looking to buy and suite another home in the future?

A: Yeah, I would definitely do it again. I am actually looking to buy the house two doors down when it becomes available. It is also a 4 level split. It is the only other one in the whole neighbourhood.

Conclusion

Braydon, was able to persevere through the challenges of turning his illegal suite into a legal one, and ended up all the better for it. He was able to build easily one of the most beautiful legal suites in the city, and is cash flow positive from it.

Related: The Top 5 Benchmarks to Look For in a Home You Want to Suite