Connect with us

Headlines

3 tips for secondary income suites

Editor

Published

on

[ad_1]

Buying a home with a secondary income suite, or with the intention of installing one, can be an effective way to offset steep mortgage costs in some of the hottest Canadian real estate markets. And it should come as no surprise that they’ve become a widespread practice in Toronto and Vancouver, where the average price for a detached home now exceeds $1 million.
 
Considering rental vacancies are incredibly low in both cities – 1.6  per cent in Toronto, and 0.6 per cent in Vancouver – offering affordable housing seems like a guaranteed money maker. In fact, 80 per cent of rental units outside of purpose-built developments are located in private residences.
 
The Canada Mortgage and Housing Corporation (CMHC) recently recognized how secondary suites help alleviate the affordable housing crunch in Canada, and has introduced new regulations to make them more affordable than ever; as of last July, 100 per cent of rental income from a suite can be factored into a mortgage qualification.
 
“Secondary rental suites are recognized as a source of affordable housing offered at a cost that is often lower than those for apartments in purpose built rental buildings,” states the Crown Corporation.
 
But building and maintaining a secondary income suite – not to mention assuming the role of landlord – isn’t a simple task. And while there are a number of resources available, it’s up to newbie landlords to understand their legal responsibilities, or face the financial consequences.
 
Here are the top challenges would-be landlords should consider before making the plunge.   
 
1. Make it legal
 
There are a number of regulations, safety codes and bylaws that must be adhered to in order to have a secondary suite. This means you’ll be on the hook for any required fees, permits and inspections if you’re building your suite from scratch. If you’re purchasing a home with a secondary suite included, there’s the chance it may not be up to code and will need to be retrofitted.
 
While it may be tempting to skip all of the legal legwork and operate your suite under the radar, doing so puts you at risk for huge financial penalties if you’re caught. Anyone can call in an inspection to the city and you could be forced to remove any work done and convert the home back into a single-family dwelling. You will also be liable in case of accident or death of an unreported tenant, and could even void your own home insurance coverage.
 
According to the Second Suites Guide prepared by the Ontario Provincial Government, a secondary suite must include the following to be legal:

  • The residence must be at least five years old
  • The house must be detached or semi-detached (different regulations exist for adding suites to rowhomes)
  • The exterior of the home cannot be significantly altered
  • The secondary suite cannot be larger than the rest of the home
  • It must have its own separate entrance, bathroom, kitchen and living facilities
  • It must be up to fire code, have a minimum 15-minute fire rating, and at least two escape routes, one of which must be a door leading to the outside
  • It must meet municipality parking requirements

The CMHC has additional requirements for those looking to use their suite to qualify:

  • The residence must be owner-occupied
  • The home can only have two dwelling units (the primary unit and the secondary suite)
  • Existing suites must have two years’ worth of rental history
  • The suite must have legal status

 
2. Obtain the right permits
 
Many homebuyers make the mistake of assuming they can build or expand an income suite in their home without researching the required permits. According to the Second Suite Guide, formal permission is required to make any significant structural changes to your home.
“If you start construction but do not have the necessary permits, you may be ordered to stop work, prosecuted, and even ordered to remove work already done. If you are uncertain as to whether you need a permit for your project, contact your local civic centre directly,” it states.
A permit is required in order to:

  • renovate, repair or add to a building
  • demolish or remove all or a portion of a building
  • change a building’s use
  • install, change or remove partitions and load-bearing walls
  • make new openings for, or change the size of, doors and windows
  • build a garage, balcony or deck
  • excavate a basement or construct a foundation
  • install or modify heating, plumbing, air conditioning systems or fireplaces

3. Know your responsibilities as a landlord

Being a landlord is no easy task – you’ll be required to handle every aspect of the suite, including marketing it and selecting prospective tenants, collecting the rent, and maintaining the property. Your responsibilities and your tenants’ rights will be governed by Tenant Protection Act in your province. It’s important to review the Act in depth, but it generally covers:

  • You have the right to collect rent on time, to not have your property damaged, and to not be harassed or disturbed by your tenant.
  • Your tenant has the right of security of tenure, meaning, they can occupy the suite until there are valid, proven grounds for eviction – even during an ongoing dispute.
  • Your tenant has the right to live in a suite that is habitable, safe and properly maintained
  • Your tenant has the right to reasonable enjoyment, meaning they can have overnight guests, cook foods of their choice, and come and go as they please.

Penelope Graham is a managing editor at Zoocasa, a real estate brokerage based in Toronto. 

Are you looking to invest in property? If you like, we can get one of our mortgage experts to tell you exactly how much you can afford to borrow, which is the best mortgage for you or how much they could save you right now if you have an existing mortgage. Click here to get help choosing the best mortgage rate


[ad_2]

Source link

قالب وردپرس

Headlines

‘Don’t give up’: Ottawa Valley realtors share statistics, tips for homebuyers in ‘extreme’ sellers market

Editor

Published

on

By

The real estate market in the Ottawa Valley can be summed up this way: people from far and wide are in a buying frenzy, but there’s hardly anything to buy at the “store,” and the limited inventory is overpriced.

This “stampede” — as one realtor described it — will affect rural towns as residents grapple with finding affordable housing and agonize over their inability to purchase homes in their price range.

“We are seeing a lack of inventory in all price ranges,” said Laura Keller, a real estate agent from Carleton Place. HomeYou’ve been selected.Only $1.49/week for your first 4 months.Special offer just for you. Unlimited access.

Continue Reading

Headlines

10 Tips For First-Time Home Buyers

Editor

Published

on

By

Buying a home for the first time is exciting and a commitment to the future. It’s often challenging, too, and the process requires a lot of steps, many of which can be tricky to navigate as a first-time home buyer.

What are some things you should keep in mind as a first-time home buyer?

First-Time Home Buyer Tips

Here are 10 tips to keep in mind as you begin your journey toward homeownership.

1. Have Your Finances in Order

It’s wise to begin saving as early as possible once you’ve made the decision to purchase a house. You’ll need to consider the down payment, closing costs (which often range from 2% to 5% of the down payment), as well as move-in expenses.

You also need to understand the other costs of homeownership, such as mortgage insurance. property taxes, utilities, homeowner’s insurance, and more.

2. How Much Can You Afford?

Knowing how much you can realistically afford in a home is another important financial consideration. Look for the home of your dreams that fits your budget.

One way to avoid future financial stress is to set a price range for your home that fits your budget, and then staying within that range. Going through the preapproval process will help you understand what price range is realistic for your budget.

3. Make Sure Your Credit is Good

Another thing to keep in mind as a first-time home buyer is your credit score because it determines whether you qualify for a mortgage and affects the interest rate that lenders offer. 

You can check your credit score from the three credit bureaus – Experian, Equifax, and TransUnion.

This is another good reason for getting preapproved before you start your search. Learn more about the preapproval process and your credit score.

4. Choose The Right Real Estate Agent

A good real estate agent guides you through the process every step of the way. He or she will help you find a home that fits your needs, help you through the financial processes, and help ease any first-time buyer anxiety you may have.

Interview several agents and request references.

5. Research Mortgage Options

A variety of mortgages are available, including conventional mortgages – which are guaranteed by the government – FHA loans, USDA loans, and VA loans (for veterans).

You’ll also have options regarding the mortgage term. A 30-year fixed-rate mortgage is popular among many homebuyers and has an interest rate that doesn’t change over the course of the loan. A 15-year loan usually has a lower interest rate but monthly payments are larger.

6. Talk to Multiple Lenders

It’s worth your time to talk to several lenders and banks before you accept a mortgage offer. The more you shop around, the better deal you’re liable to get – and it may save you thousands of dollars.

7. Get Preapproved First

Getting a mortgage preapproval (in the form of a letter) before you begin hunting for homes is something else to put on your checklist. A lender’s preapproval letter states exactly how much loan money you can get.

Learn more about the preapproval process and how preapproval provides you with a significant competitive advantage in our article How Preapproval Gives You Home Buying Power.

8. Pick the Right House and Neighborhood

Make sure to weigh the pros and cons of the different types of homes based on your budget, lifestyle, etc. Would a condominium or townhome fit your needs better than a house? What type of neighborhood appeals to you?

9. List Your Needs and Must-Haves

The home you purchase should have as many of the features you prefer as possible. List your needs in order of priority; some things may be non-negotiable to you personally.

10. Hire an Inspector

Hiring an inspector is another crucial step in the home buying process. An inspector will tell you about existing or potential problems with the home, and also what’s in good order. You can learn more about home inspections and how to find a home inspector through the American Society of Home Inspectors website.

Buying a home for the first time is a challenge, but it’s one you can handle with the right planning and preparation.

Continue Reading

Headlines

A Simplified Guide for Toronto First-Time Home Buyers

Editor

Published

on

By

Toronto is the largest city in Canada, the fourth largest city in North America, which makes it an exciting place to live in.

But as with other major cities, finding the perfect place to move to can get tricky. If you’re planning on buying a home for the first time in this city, it is indeed a big decision and there are things you should know in advance.

Don’t worry, this guide will help explain the basics of what you as a buyer should know when you decide to buy a home. It will make you feel like a true expert during the buying process.

Decide what type of home you are looking for

There is no right answer to what makes a good home. It all depends on your preferences and needs as the resident. It is, therefore, a good idea to determine as early as possible which features of a home are important to you. If you are buying a home and moving in with someone, it can be a good idea for both of you to make a list and compare.

Toronto is a city that offers different styles of living accommodations and its neighborhoods are quite versatile and diverse, same as the people living there who come from all parts of the world.

The most common forms of housing and real estate opportunities in this city include bungalows, two-storey houses, split-level homes, and the very popular Toronto condos. Due to the high property values, the city boasts of construction of many condominiums as they are a more cost-efficient choice and provide a plethora of benefits.

When you decide on the type of home you want to buy, it is good to do some research and learn the biggest differences between them.

What to think of when choosing homes in Toronto

There are certain things you need to consider when choosing your home in this city. 

Being close to the things you need to visit every day makes life a lot easier. Pay attention to the proximity to shops, preschools, schools, and your job. In addition, access to good public transportation is crucial. Being able to move around the city easily and the opportunity to commute is important to many.

Know that having a balcony can significantly increase the value of your home and improve your well-being. Being able to move easily in the area is something that many people underestimate, but can be very convenient, and this is why you should see if there are good cycles and walking paths. 

And finally, make sure that the house is well designed which is a quality that does not disappear with the age of the house or with renovations. 

Set your budget

Before you start the search for your new home, you must know how expensive of a home you can buy. It is preferable to know in what price range to look for. The budget is usually decided based on your mortgage and how large are the monthly costs you can handle.

A mortgage is always about a balance between risk and income for the bank. The higher the risk for the bank to lend to a particular home, the more expensive the mortgage will be. When it comes to the bank’s reasoning when applying for a loan, it is in principle always a question of whether you as a borrower will be able to repay the mortgage.

The bank also takes into account your financial history. If you are a person who has managed your finances well, the chance increases that you will get your mortgage approved. If, on the other hand, you have a bad reputation with banks, it is weighed in as an aggravating circumstance.

Continue Reading

Chat

Trending