If you’ve lived in your home for many years and are ready to move, but don’t really want to sell the property, you can always consider turning your home into an income property. This is often a worthwhile investment for people, though before proceeding with the venture it is important to understand that residential income properties must satisfy a number of regulatory requirements in York Region. This includes local town by-laws, fire department requirements as well as building code requirements.
For example, the Town of Newmarket has implemented a governing by-law, referred to as Accessory Dwellings, that enforces the number of parking spaces, separate entrances and smoke detectors an income property can or must have, as well as other requirements such as fire retardant drywall used between floors and the necessity for fire-rated doors.
On the other hand, Aurora has not been approving any applications for Accessory Dwellings for a number of years now, while Barrie has had serious issues surrounding the renting of rooms because of issues involving students of the city’s Georgian College campus.
In addition to meeting the requirements set out by the city in which the property is located, homeowners must consider the cost of carrying the income property.
To determine the amount of the monthly rent to charge you should take into consideration the deferred maintenance costs, mortgage payments and interest and come up with a suitable annual budget. Once this realistic budget has been created, you can determine the appropriate rental amount. Though some income property owners aren’t overly concerned about positive cash flow, they do need to think about earning a high rate of return on their initial investment. This amount can be calculated over a defined period of time that is normally beyond at least three to five years, in an “up market.”
If you’re considering turning your home into an income property, contact your city about any regulation requirements you must meet before getting started or call me to discuss your options. You should also talk to your financial advisor to make sure it’s a financially reasonable venture.