Adding a secondary suite to your home presents an excellent opportunity to earn reliable, lucrative income passively. These returns can be used to offset mortgage expenses, towards other ventures, or any way you see fit. Further, this type of project can also contribute to a greater appreciation of long-term property value as future buyers will be willing to pay a premium for a turnkey rental unit.
While advantageous, this process is not without its complexities. It requires a careful consideration of local laws and regulations, a conscious approach to construction and renovation, and strategic implementation.
This article provides a comprehensive guide on how to add a secondary rental suite to your Toronto home, addressing the legal, financial, and practical aspects involved.
Searching for a high-opportunity investment opportunity in West Toronto? Our team has decades of industry experience to support your goals. Call us at 416.441.2888 or reach us by email at evan@christensengroup.ca.
Understanding Legalities
Secondary suites are impacted by regulations at both a municipal and provincial level. These legalities impact both the construction process and the ongoing operation of your rental.
Zoning Implications
Before you begin the construction of a secondary suite, it is important to ensure that your vision is suitable within Toronto’s zoning regulations. Most neighbourhoods or zoning areas do permit rental units, however, there are certain requirements that must be met. In some cases, you may be required to apply for rezoning or a minor variance.
Ontario Building Code
Any rental suite added to a home in Toronto must comply with the Ontario Building Code, which outlines physical property requirements for ceiling heights, fire separation, means of entry and exit, windows, ventilation, and natural lighting. Failing to adhere to these requirements could result in fines or other penalties.
Construction Permits
As with any substantial construction or home renovation project, adding a secondary suite to your home will involve obtaining the required permits. This requires filling out and filing a series of documents and applications with the City. Keep in mind that you may need to provide detailed plans and specifications about your build, therefore it is advisable to consult with a professional architect or contractor first.
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Crafting a Budget
The financial implications of adding a secondary suite to your home are significant and multifaceted. Beyond the costs of construction. a comprehensive financial plan will also factor in income potential, lending options, and taxation on returns.
Construction Costs
The most demanding financial aspect of adding a rental unit to your home is the upfront costs. As exact expenses will vary depending on the scope of the project, preferred timelines, and the condition of your home, you should consult with a reputable contractor or architect for an accurate assessment and estimate before solidifying your budget.
Financing
Adding a rental suite to your Toronto home is a relatively substantial investment. With that in mind, you may not intend to finance the entire project with only personal savings. As a homeowner, you have several financing options to consider, including home equity loans, lines of credit, and refinancing your existing mortgage. It is important to evaluate the terms and interest rates of each option to determine the most cost-effective solution.
Rental Income
Earned rental income from a secondary suite can significantly offset the initial investment. However, accurately determining your income potential is dependent on a number of factors including the square footage of your unit, the number of bedrooms and bathrooms, the location of your home, and more.
In order to best assess the income potential of a secondary suite in your home, ask a local real estate agent. They can conduct a market analysis to help determine a realistic rental rate for your suite.
Insurance Impact
As a homeowner, you will also need to notify your insurance provider about your intentions to add a rental unit to your home. This will ultimately impact your premiums.
Preparing to make a real estate investment? Consider these posts from our blog for helpful guidance.
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Speak to an Expert
If you’re looking to make a strategic, high-return investment in Toronto real estate, you’ll need an expert in your corner. Boasting over four decades of experience, Christensen Real Estate Group is your best resource for creating a profitable income property.
Beyond the parameters of a traditional real estate transaction, we strive to be your long-term advisors on all things real estate. As investors and landlords ourselves, we can provide you with critical advice on tenant sourcing and communication, relevant regulations, and more to help you get off on the right foot.
Searching for guidance on West Toronto real estate investment? Our team has decades of industry experience to support your goals. Call us at 416.441.2888 or reach us by email at evan@christensengroup.ca.
