apartment in basement

[feetup]

I have a home that i purchased in 2006 before i was a REIN member it was a new home and i bought it for $390000 and i have spent around $20000 on upgrades i figure it is still only worth about $400000 because of the market. It has very high ceilings in the basement and it is very big it would be a great rental and it is in Ajax Ont,my brother can put the apartment in for about $20000 and i would have good positive cash flow ass i have alot of equity in the house.
What i would like is some advice should i sell it and take the loss and use remainder to buy maybe two other homes or go ahead with putting in apt and deal with all the building codes and whatever else go along with the process.
Is this way to much work?

 

[IanSzabo]

Where is it located in Ajax?
Is it zoned for a Duplex?
Have you had the house appraised?
What would your cash flow be if it was converted
How much is owing on you current mortgage
Does your brother have experience in converting single family homes into Duplexs
I converted a single family home in Whitby last year, There are lots of variables into converting properties. You have to do lots of homework in order to make it work & connections at the city
Can help.

 

[Thomas Beyer]

QUOTE (luckey3 @ Mar 15 2009, 09:31 AM) I have a home that i purchased in 2006 before i was a REIN member it was a new home and i bought it for $390000 and i have spent around $20000 on upgrades i figure it is still only worth about $400000 because of the market. ...
What i would like is some advice should i sell it and take the loss and use remainder to buy maybe two other homes ...
I don`t see the loss (390K + 20K - mortgage pay down of 10K or so = 400K more or less .. where is the loss ??) ! houses don`t get bought and sold and assessed like stocks .. by the minute/day/week/month .. think: years/decades !

So if you can create more cash-flow from a basement suite and don`t mind holding for 5+ years .. then add the basement and cash-flow for a decade or 3 .. then the mortgage is 0 and it still cash-flows and likely is worth 800K to $1M due to inflation .. hey: become a millionaire with ONE house .. what wrong with that ??

Patience .. patience .. real estate is a slow path to wealth ..

Be aware that some anal neighbor may not like it as the basement suite may be illegal .. so ensure that tenant is clean, makes no noise, no weird smells drift across the neighbor`s fence, doesn`t park his rusty car (or worse: 3) in from of the neighbors yard, has no barking dog etc. ...

 

[feetup]

QUOTE (thomasbeyer2000 @ Mar 15 2009, 02:29 PM) I don`t see the loss (390K + 20K = 400K more or less .. where is the loss ??) ! houses don`t get bought and sold and assessed like stocks .. by the minute/day/week/month .. think: years/decades !

So if you can create more cash-flow from a basement suite and don`t mind holding for 5+ years .. then add the basement and cash-flow for a decade or 3 .. then the mortgage is 0 and it still cash-flows and likely is worth 800K to $1M due to inflation .. hey: become a millionaire with ONE house .. what wrong with that ??

Patience .. patience .. real estate is a slow path to wealth ..

Be aware that some anal neighbor may not like it as the basement suite may be illegal .. so ensure that tenant is clean, makes no noise, no weird smells drift across the neighbor`s fence, doesn`t park his rusty car (or worse: 3) in from of the neighbors yard, has no barking dog etc. ...
So every apt that i might build does not necessarily have to be legal?
That was i was worried about all the hassel of permits and zoneing and the time.
My brother will do great work and up to code but do the have to be legal?

 

[Thomas Beyer]

QUOTE (luckey3 @ Mar 15 2009, 12:48 PM) So every apt that i might build does not necessarily have to be legal?
That was i was worried about all the hassel of permits and zoneing and the time.
My brother will do great work but do the have to be legal?
people finish basements all the time .. usually no permit is required as the exterior is not impacted !

people also frequently rent an up and down bungalow to 2 tenants or rent basement suites .. and frequently they are not legal .. but tolerated unless someone complains .. i.e. most cities recognize the fact that cheaper housing is created and thus don`t enforce the rules unless written complaints are filed with the city .. hence tenant selection is critical ! But yes, there is a risk that the basement suite gets shut down by the city .. and you have to decide if you are willing to take that risk or not ..

 

[feetup]

QUOTE (thomasbeyer2000 @ Mar 15 2009, 03:15 PM) people finish basements all the time .. usually no permit is required as the exterior is not impacted !

people also frequently rent an up and down bungalow to 2 tenants or rent basement suites .. and frequently they are not legal .. but tolerated unless someone complains .. i.e. most cities recognize the fact that cheaper housing is created and thus don`t enforce the rules unless written complaints are filed with the city .. hence tenant selection is critical ! But yes, there is a risk that the basement suite gets shut down by the city .. and you have to decide if you are willing to take that risk or not ..


I am willing to take the risk but i would have to put in another door can i go ahead with that or should i get permit and if i do get permit would that set off any alarm bells?
Thanks for your input

 

[Thomas Beyer]

QUOTE (luckey3 @ Mar 15 2009, 01:29 PM) I am willing to take the risk but i would have to put in another door can i go ahead with that or should i get permit and if i do get permit would that set off any alarm bells?
Thanks for your input
depends on city and code of province .. usually you need a permit if you change exterior like: decks, fences, windows, doors, roof pitch, dormers .. and usually you get an OK if it is to code !

 

[feetup]

QUOTE (thomasbeyer2000 @ Mar 15 2009, 03:34 PM) depends on city and code of province .. usually you need a permit if you change exterior like: decks, fences, windows, doors, roof pitch, dormers .. and usually you get an OK if it is to code !


Perfect thanks for your input much appreciated

 

[kabuku]

Hi Luckey,
You don`t need a permit in Ajax to install windows and doors into existing openings.
You are supposed to get one if you are creating a new opening.
However, 99.9% of people don`t get a permit for a new opening above grade.
If it is below grade the job is much more involved and expensive.
when doing the below grade entry it`s not unlikely that a neighbour would call the city and have an inspector sent over. That`s because it takes longer and possibley requires an excavator and just draws more attention in gereral. The inspector will ask if you are putting in an apartment at that point.

You don`t want a job like that stopped half way through, it can end up a real mess.
About two years ago I was called by a homeowner in pickering who had excavated a hole at the side of her house in preparation for the installation of basement entrance door.
A city inspector showed up and stopped the job.
She had to apply for permits at that point and wait for them.
Her original contractor left because he was no longer willing to do it for the same price and perhaps not able to do what was required.
So now she had to search for new contractor, more time wasted.
Meanwhile it has been raining alot and the sides of the hole caved in to the point that their neighbours fence fell in and the hole expanded into the neighbours yard.
There may be a way to access the staircase to the basement at grade level or above(much cheaper and easier).
Anyhow, I would be glad to drop by and give any usefull input that I can.
I am in Pickering so it`s not far.
After I have spewed all this, you are probably going to say it has a patio door walkout, LOL.
Regards, Brian Anderson
www.andersonwindowsanddoors.ca
416 895 1764

 

[Al Verwey]

Here is my view on it. First of all, as a REIN member, we are supposed to do things legally and honestly. Never mind that others can skirt the law and get away with it. Why not do it legally, then call the fire or building inspectors on other illegal units in your area to lessen the competition?

Second, I have some experience with dealing with zoning issues, by-law and fire inspectors. It`s one thing to put in a nice basement apartment. It`s quite another to have it up to fire code. The fire inspectors work quite closely with the building inspectors and in towns where secondary suites are legal, they must meet fire and building codes and fit the zoning for the location. You might find that Ajax is not very proactive in inspecting these places, but all it takes is a complaint from a tenant or neighbour to bring them in. Why risk it?

Even if you plan to sell it, it will be a great value-adder if you can claim that your property is a "legal retrofit" since most listings do not warrant this. If you have good tenants and it is cash flowing nicely when you want to sell, that will also help you to get your price. But remember, the REIN system is based on cash flow, not appreciation. Find a positive cash flow property, then do it again!