Is your mortgage weighing you down and draining your monthly coffers? Maybe it’s time to put that empty basement to work for you by turning it into a legal rental suite.
Scott McGillivray, host of the hit show Income Property on HGTV, says many homeowners, particularly first-timers, don’t quite realize how much income potential lurks within their own home.
“A lot of first-time buyers don’t even consider having an income suite in their home and everyone should consider it. It’s a great investment for the future,” McGillivray said.
With the right circumstances and proper renovations, a home valued at just $350,000 could pay off as much as an extra $1,000 every month with a good apartment unit, he says.
When looking for a home with income potential, don’t go overboard, McGillivray says — choose practicality over fantasy.
“Be modest with what you can afford and be reasonable with what you really need. Don’t be greedy,” McGillivray said.
One of the biggest mistakes McGillivray sees homeowners make is trying to rent out a dingy basement apartment without renovating it. Invest some money, he says, and make your basement apartment somewhere you would personally love to live — it’ll lead to better tenants and higher rents in the long run.
“If you’re going to rent out a space, make sure that it’s up to you own standards. Don’t expect people will settle for less than you would settle for. Rather than charging less, fix the place up so you can charge more. You’ll get better tenants that way,” McGillivray said.
If you’re thinking of buying a home with some extra income potential, McGillivray suggests looking for a few things:
• A separate entrance. It allows for privacy and convenience.
• Good ceiling height. If it’s too low for you to live in, it’s too low to rent.
• Decent window sizes. Light is important and makes an apartment much more livable.
• Extra parking. A spot can be worth up to $100 per month.
If the seller says the property is already tenanted, check to make sure and ask to see an up-to-date zoning permit for the apartment.
“Know what you’re getting yourself into and don’t make assumptions. Be smart and look into things,” McGillivray said.
Be aware that many suburban areas don’t allow rental apartments in private homes, so check to make sure having an apartment is legal before counting rental income in your home-buying calculations.
McGillivray offers more tips and advice on his website at incomepropertyeducation.com and Income Property airs Mondays at 8:30 p.m. ET on HGTV. He hopes more people will consider using their home to generate extra income.
“It’s all about taking action. If you can get your house to work for you, do it!” McGillivray said.