Mortgage Blog
Purchasing A Home with an Income Suite
August 4, 2023 | Posted by: Sharon Patton
In this high-rate environment it may seem like your dreams of homeownership are just that a dream.
What if we told you that there could be a solution for you to consider?
You may want to consider a property with an income suite, also known as a secondary suite or a rental suite. The primary residence is occupied by you the owner, and the separate living space within the building has a separate entrance, kitchen, bathroom, and living area. This income suite can provide an additional source of income and be a great investment plan.
Let's take a look at some of the benefits, challenges, and responsibilities that should be considered.
Rental Income
The primary benefit of purchasing a property with an income suite is the rental income it can generate. This extra income can help new homeowners to offset the costs of the mortgage, property taxes, insurance, and other expenses that come along with owning a property.
Mortgage Qualification
When you purchase a property with an income suite the rental income can be factored into your mortgage qualification. In this high-rate environment, this could help you qualify and even allow you to afford a more expensive property than you could have considered with just your primary income.
Mortgage Paydown
Having income from tenants can help you to pay down your mortgage balance faster and build equity in your property.
Property Value Appreciation
Investing in a home, including one with a rental suite helps to increase your overall net worth. This is always a great way to secure your financial future and eventually allow you to move up in the housing market.
Flexibility
Something to consider when purchasing a property with an income suite is future potential. This could be used as a sperate office space, recreation area, accommodating senior family members or your adult children in post secondary education who would like independence without the high cost of rent or residence housing costs.
Legal Regulations
It is essential to research local zoning laws, building codes and rental regulations to ensure the suite is legal and complies with all requirements. You want to make sure that you do this before your purchase to ensure you are able to access the benefits of rental income towards your mortgage expenses.
Management
How do you find tenants?
What is a rental agreement?
What is a fair market rent for my suite?
How do I deal with maintenance issues?
To ensure for a smooth tenant-landlord relationship you need to understand your responsibilities. You could hire a property management company to assist with this.
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Additional Expenses
Owning a property with two living units means more expenses for maintenance, repairs, utilities, and property management. You need to consider if these costs and responsibilities are manageable with your budget.
Tenant Turnover
There may be times when your income suite may be vacant and affect your rental income. You need to ensure that you are able to maintain the property without it.
Financing
When it comes to rental suites, not all lenders have the same criteria and requirements. It is good to discuss your plans with us so that you understand your financing options and we find the best option for you.
With any purchase, the first step is always to reach out to us and we can look at your finances and come up with a strategy to move forward. This will begin with a pre-approval, to make your house search as stress-free as possible and keep you within your budget.
Let's chat today and see if the benefits of an income suite as an option for you to consider when it comes to your purchase.
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