Cons of buying home and renting out basement?

[Canucks3322]

I am deftly afraid of finally buying a home and then losing my job and not being able to make my mortgage payments and one thing that has come to mind is buying a house with a nice basement that can always be rented out and at least cover half my mortgage payment (I'm looking for houses $300,000 to $350,000 and figure a basement can rent for $750-$1000?).

What do you guys think the cons of doing this are? Finding good tenants of course, and losing a bit of privacy...what else? Oh, and paying taxes on rental income...anything else to be wary of?

Oh, and I should mention that I want to be 100% compliant, what are the laws in Calgary currently?

[Skyline_Addict]

It's all about location too. You can live in a 40 year old house that is in dire need of rentals and you are much more likely to find tenants if it's close to downtown, accessible, etc.

I'm assuming you would be looking for something with a couple rooms in the basement. You should be able to get that much money if you rent out 2 rooms, probably not if just 1.

[G]

If you're deftly afraid then this is definately not the right time for you to buy a house. With historic low rates, near historic high home prices and near flat incomes it just doesn't feel right...also when the average person can't afford the average home something is going to give.


Originally posted by Canucks3322
I am deftly afraid of finally buying a home and then losing my job and not being able to make my mortgage payments and one thing that has come to mind is buying a house with a nice basement that can always be rented out and at least cover half my mortgage payment (I'm looking for houses $300,000 to $350,000 and figure a basement can rent for $750-$1000?).

What do you guys think the cons of doing this are? Finding good tenants of course, and losing a bit of privacy...what else? Oh, and paying taxes on rental income...anything else to be wary of?

Oh, and I should mention that I want to be 100% compliant, what are the laws in Calgary currently?

[Canucks3322]

I guess what I'm really asking is why doesn't everyone just do this? Am I missing something?...I guess privacy would be a big issue for some people and losing space but I don't mind either of that if it means half my mortgage payment being paid for?...

And when I say deftly afraid, I just mean I hate knowing that I'll have a $1500 a month payment for the rest of my working life...it sucks but I can see what you're saying about something having to give, I have been waiting on the sidelines for years for the big crash to come, but right now, I plan to get married to soon and want to settle down and I feel most of the homes in Calgary are FAIRLY priced, of course there's always that possibility of a big crash coming but I don't want to bank on that any longer, I have other reasons for wanting to buy now (well, before the end of teh year, Sept-December probably)...

[G]

If you plan on staying in the home for years and buy within your means sure why not. But if you can only afford to buy because of the renter in the basement I would think twice.


Originally posted by Canucks3322
I guess what I'm really asking is why doesn't everyone just do this? Am I missing something?...I guess privacy would be a big issue for some people and losing space but I don't mind either of that if it means half my mortgage payment being paid for?...

And when I say deftly afraid, I just mean I hate knowing that I'll have a $1500 a month payment for the rest of my working life...it sucks but I can see what you're saying about something having to give, I have been waiting on the sidelines for years for the big crash to come, but right now, I plan to get married to soon and want to settle down and I feel most of the homes in Calgary are FAIRLY priced, of course there's always that possibility of a big crash coming but I don't want to bank on that any longer, I have other reasons for wanting to buy now (well, before the end of teh year, Sept-December probably)...

[Tik-Tok]

Originally posted by Canucks3322
I guess what I'm really asking is why doesn't everyone just do this? Am I missing something?...

Zoning. If you want a legitimate basement secondary suite, you have to be zoned for it. This cuts down your neighborhood options by quite a bit (for any older, close to downtown, neighborhood anyways)

[ExtraSlow]

Also, renters cause damage, pay late, don't pay, and leave without notice.
A nice conservative estimate would be that you'll have a renter for about 8 months a year, and you'll spend several thousand extra maintaining the place.

[Weapon_R]

Worst part of renting your basement is privacy issues. You can hear everything they do and they can do the same. Depending on the house, even conversations can be heard so I'd really evaluate whether you want to do this. If you have or intend to have kids, imagine the noise they will create for the people downstairs.

I thought about trying it out but the transient nature of most renters and the lack of privacy turned me off. Damage and problems are less of an issue if you live upstairs because they have to see you all the time.

[Bladeh]

Originally posted by Tik-Tok


Zoning. If you want a legitimate basement secondary suite, you have to be zoned for it. This cuts down your neighborhood options by quite a bit (for any older, close to downtown, neighborhood anyways)

I checked to see I could rent out my basement suite a few weeks ago, its $400 to submit an application, this does not included any upgrades to make it legal, (separate heating, smoke detectors, etc) also it mentioned parking, if its a 2 bedroom you have to provide 2 parking spaces in your application.

[Marsh]

Originally posted by Canucks3322
I guess what I'm really asking is why doesn't everyone just do this? Am I missing something?...I guess privacy would be a big issue for some people and losing space but I don't mind either of that if it means half my mortgage payment being paid for?...

And when I say deftly afraid, I just mean I hate knowing that I'll have a $1500 a month payment for the rest of my working life...it sucks but I can see what you're saying about something having to give, I have been waiting on the sidelines for years for the big crash to come, but right now, I plan to get married to soon and want to settle down and I feel most of the homes in Calgary are FAIRLY priced, of course there's always that possibility of a big crash coming but I don't want to bank on that any longer, I have other reasons for wanting to buy now (well, before the end of teh year, Sept-December probably)...

I know ALOT of people that do this, and it works perfectly fine for them. It just depends on what you want from your house, some people prefer privacy so they don't rent the basement. Some people never use their basement so instead rent it out.

I think cons you are looking at are just like some people mentioned here, privacy, f inding tenants etc. But its worth it if decide to do it

[Tik-Tok]

Originally posted by Bladeh


I checked to see I could rent out my basement suite a few weeks ago, its $400 to submit an application, this does not included any upgrades to make it legal, (separate heating, smoke detectors, etc) also it mentioned parking, if its a 2 bedroom you have to provide 2 parking spaces in your application.

So you're suggesting the OP buys your house? Otherwise that info is kind of useless to him, lol. It would cost me almost $6000 for just an application get my property re-zoned for secondary suite.

[ercchry]

so... are you talking a suite, or just a roommate who live in the basement?

[TomcoPDR]

Originally posted by ExtraSlow
Also, renters cause damage, pay late, don't pay, and leave without notice.
A nice conservative estimate would be that you'll have a renter for about 8 months a year, and you'll spend several thousand extra maintaining the place.

:werd: :werd: :werd:

[schurchill39]

Not very useful for calgary but the place I live at in Saskatoon is a fully legal basement suite. I have my own entrance and everything is all separate. The only time I see the landlords upstairs is when we come home at the same time. The only maintenance that we've needed was a plumber once to fix the toilet that rocked around a bit.

With what I am paying in rent I am easily covering a big portion of their mortgage. I know after this experience that when I choose to buy my first house I will definitely be looking for a similar set up. An old supervisor I had when I worked in the field has a basement suite and he was telling me that he made is regular payments and took the rent he collected as "extra payments". With this he said he paid his house down way quicker. Seeing as he is 28 and now owns it free and clear I'd say it worked out pretty good for him.

If you get good renters in then its pretty worry free plus the added security of having that extra income to handle mortgage payments/ landscape or what ever it is they plan to do with my money is definitely a bonus.

I'd say do it. Even with the extra costs upfront its well worth it IMO. If you don't buy a dump then you shouldn't have to worry about "thousands in maintenance for 8 months". Do reference checks on your renters and everything should be alright.

[A790]

Depends who the renters are, and who you are. Finding respectful renters is difficult, but not impossible.