Affordability is tough in today’s market. Why not convert your basement into a rental unit?
It can be a brilliant investment opportunity. The extra income can help you pay off your mortgage faster, and help you build equity. It’s a stepping-stone to starting a property investment portfolio. You can use the equity in your home to put another down payment on another rental property.
Let’s look at the many advantages of converting your basement for rental income.
1. Extra source of income
Renting out your basement means you’ll now have a second monthly source of income at your disposal. You can use it for living expenses, paying your mortgage, bills, and taxes, or even saving it for a project.
The rent you can charge will vary on the location, size, and number of rooms. But, any amount of extra income helps you pay down debt. Not to mention, if your home has income potential, it will become attractive at the time of resale.
2. Renovations will boost your home’s equity
If your home has income potential, it will become attractive at the time of resale. While you are renting out your basement, you can make repairs and renovations. Over time, these repairs will count towards increasing your home’s resale value.
3. Tax Benefits
Despite having to claim rent as extra income, owning an income unit in your home offers tax benefits.
The government considers your income unit as a business. You’ll be able to deduct mortgage interest, utility costs, repairs, and maintenance. This works to reduce your net income when it comes time to file your taxes each year.
It’s best to work with a tax professional. This ensures you’re reaping all the benefits of these tax deductions.
4. A Low-Cost Way to Become a Landlord
Investors often rent out separate houses or condo units. This comes with several extra expenses. If you wish to expand your investment portfolio in the future, this may be something to consider. But, starting in your own basement, keeps your costs low and maximizes your earnings. You are right there if your tenants need help with occasional repairs. No need to commute or send a professional to check in on repairs.
5. Extra Security
When you are away on vacation or business, your tenants can provide an extra layer of security for your home. Your home still looks lived in. If you have a good relationship with them, they may even help with minor tasks while you’re away. Like mowing the lawn, shoveling snow, taking out the garbage, and taking in mail.
It may also be a good opportunity to share pet-sitting duties instead of hiring someone to do it for you.
Below are some of the requirements you’ll have to meet before you list your basement for rent:
- Fire and electrical safety standards
- Occupancy codes
- Property standards
- The residential zoning requirements
There are many benefits to converting your basement into a rental unit. Whatever your future goals, a basement income suite can help get you there!