Jul 15, 2016

Building a Legal Basement Apartment

If you are looking to build a home as an investment property, with less concern for it being your “forever” dream home, you’ve likely been considering including a legal basement apartment. We’d like to talk about some of the process you will need to follow in order to add this money making option to your home, as well as some of the pros and cons of suites.

The Benefits of Building a Basement Suite: Money, Money, Money

Obviously, the number one benefit, and the reason most people are considering a basement suite, is the additional income it will provide. With the added income from a basement suite supporting your mortgage, you can start considering a home that is more than you might have been able to manage as a mortgage on your own. Basement suites often cover around 35% of the mortgage costs – these savings can be substantial, turning a $2200 mortgage into a much more manageable $1500. Down the road, if you choose to hold on to the property and rent the upper unit as well, you will likely be able to bring in enough to cover your entire mortgage, with some extra left over.

The Process: How to Build a Legal Basement Apartment

The legality of building a secondary suite of any kind will largely depend on your zoning, and can change drastically from region to region. You should check with your municipality to learn more about specific rules for the area you wish to build.

Within the City of Nanaimo, Single Family Residential properties are allowed to have a secondary suite (since 2005). The City has put together a guide for those looking for specific information, which can be downloaded and printed here. Limits on the suite include a maximum 40% floor size of the habitable floor space, and no more than 2 bedrooms.

If you are considering a renovation to add a legal suite, this process will nearly always start with a Building Permit application with your municipality. This first step will get you in contact with your local authorities and inspectors, who will also be able to answer additional questions you might have on the requirements in your region for “legal” suites. You will need to be aware of building code rules (such as ceiling height) which may impact the viability of your suite addition.

If you are considering a legal suite as part of a new home building project, your builder will be able to help you navigate the process of ensuring your suite is legal!

The Challenges: What You Should Know About Becoming a Landlord!

Finding the Right Tenant: Just because you’ve built a beautiful new basement suite, doesn’t mean it will be easy to fill it. Luckily, the rental market is looking pretty good across a lot of our regions right now, and chances are you will get applications (if you are priced competitively.) However, sorting through those applications to find the right tenant can be more of a challenge. Would you prefer a single person, or are couples & families ok? How do you feel about pets? How often do you want to be filling the suite – would you prefer a longer term tenant over a shorter term one? Regardless of your choices, make sure you interview until you find a tenant that feels “right” – and be sure to check their references!

Things Will Break: Murphy’s Law applies here – things will break for your tenant when it is most inopportune for you to deal with it! Be aware of your responsibilities as the land lord, and know that there will be maintenance & repairs which you will need to deal with throughout the year. If the idea of a panicked phone call from your tenant doesn’t appeal to you, you might want to reconsider the idea of including a suite in your home.

Consider Your Privacy: Clever landscaping and well designed entrances can make some suites almost invisible to the main floor residents. However, some sound and smells will carry despite your best intentions. Think about the level of privacy you are comfortable with sacrificing to your basement tenant. Work with a designer & builder that can help you figure out the logistics of keeping both living spaces as private as possible! And realize, you might not be able to have it ALL.

Be Aware of Tax Repercussions: Your tax return is about to get more complicated. Rental income has to be declared on your tax return. You may also have to deal with capital gains taxes when selling the home. You may wish to speak to your accountant before making a final decision about adding your legal suite.



Overall, adding a legal suite can be a great option to assist with the overall cost of home ownership, and most landlords seem to agree that it’s generally worth the hassle. As with any large project – research and awareness is key to long term happiness & stress reduction! Working with qualified professionals can make the process of adding a legal suite much easier as well. Feel free to give our team at Westmark Construction a call with your basement suite & building questions – we’re here to help!

Contributor: weather