It’s certainly not uncommon here in the Lower Mainland to have an income suite in your home. In fact, a suite can add value to your home as many people specifically look for homes with a suite that they can rent out in order to help with housing costs. This blog is to help anyone that may be on the fence about taking on the venture of owning a house with a suite that they can rent out.
There are several pros when contemplating whether or not to be a landlord. The main pros fall under the category of MONEY. First, you will get rent payments which you can put towards living costs, housing, other investments, or whatever the heck you please (can you imagine the shoe collection you could start….just kidding….kind of)! Second, you may also qualify for a larger mortgage, if you can demonstrate that your home is income producing. In order to do this, the suite must be legal and registered; homes listed with “nanny” or in “in-law” suites could be a way to disguise that they are not legal and/or registered. These types of suites may not have full rental potential as they may not have a full kitchen, etc. Third, the resale value of your home may be higher (compared to similar homes without suites) as they are very desirable; especially here in the Lower Mainland.
There are also benefits to owning a suite but not renting it out. First, you can use it as a guest suite for out of town guests. Second, it provides a sense of financial security if you ever do need to rent it out. Third, (if bylaws and zoning permitted) you could use it as an office for your business.
While money always talks, there are risks and downsides to being a landlord that should also be considered. One risk is if your suite is not authorized or registered you could be fined (with the amount of the fine varying from place to place). In Surrey, this is a huge news story right now as the city is cracking down on unauthorized suites (read here for more information: https://globalnews.ca/news/3749352/surrey-rental-crackdown/). This can result in your tenants being displaced and also a loss of income, which if you need this to pay your mortgage or other bills can put you in a not-so-great spot.
Another risk is with tenants. Everyone wears a tie to a job interview right? What this means, is that it can sometimes be hard to know who you’re really going to be renting to; their true colours may not appear until after they’ve already moved in. One way to minimize this risk is to ask for multiple references, look into their financial situation (i.e., ask for a letter from their bank to show they’re in good standing), and one of the best tools is to do a background search for their name on the Internet. Oh the Internet – it’s amazing what it can reveal.
While not a risk or a con necessarily, one important consideration is to consider the additional work it will be to be a landlord. As a landlord you are required to do certain repairs and maintenance (see here for more information: https://www2.gov.bc.ca/gov/content/housing-tenancy/residential-tenancies/during-a-tenancy/repairs-and-maintenance\). In addition, it is work to find a tenant, including placing an ad, showing the suite, interviewing tenants, reviewing references, doing walk throughs, completing paperwork, etc.
If you are considering becoming a landlord or purchasing a home with a suite, certainly do your homework. Research what it is like to be a landlord and know your rights as a landlord and your tenants’ rights.
Fiona White – REALTOR® with Sutton Group – West Coast Realty