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Should you Buy a Home with a Secondary Suite?
Should you Buy a Home with a Secondary Suite?
If you’ve ever hunted for a new home, either for yourself or as an investment, you’ll likely come across homeowners advertising the existence of a secondary suite at their property. Secondary suites in single-family homes have long been positioned as offering valuable passive income for a homeowner looking to supplement their mortgage or other investments. So, what are the advantages to having and renting out one? What’s the catch?
First, what is the purpose for your home purchase? If you’re looking for strictly an investment property, then a home with a secondary suite offers the potential of more than one source of rental income. Not only will you be collecting rent for the tenant of the main property and that of the secondary suite, you can rest easy that you will likely have rental income coming in from one or the other even in times of vacancy. Not only that, you will likely be able to collect a higher total amount of rental income with two properties in one. If your plan is to live in the new home, rental income from the secondary suite can easily help with the home’s potentially hefty mortgage payments.
Typically homes with a secondary suite are valued higher by home appraisers and are in demand with buyers looking for good investment opportunities, so you can be certain your home will hold, if not grow, in value. You also will likely have an easier time securing at least one tenant since your home will offer two property options of very different sizes.
There are some important things to remember when purchasing a home with a secondary suite, and you should always do your homework before signing a contract. Not all secondary suites have been built with the necessary permits, or proper residential zoning and health and safety requirements. You’ll surely be in hot water if you purchase a home and rent out its not-so-legal secondary suite. But if done right a secondary suite can offer passive rental income, or a little extra mortgage support so you can find, and afford, the home of your dreams in Canada.