Moving, keeping my house - should I put a suite in it?

[Healthie]

I'm moving from a LCOL city to a MCOL, ideally in 6-8 months. I have a 1600ish sq. foot house, 4 beds 2 bath, that has had a lot of renovations - both bathrooms, basement's been completely redone, etc.

I've been planning on keeping it as a rental and having it managed by a property manager,, and was pretty sure I would not put a suite in it due to the amount of work, but I'm reconsidering this after speaking to a real estate agent.

Rents: In my city, top suites rent for 1500$ (3br; I suspect I could get 1200-1400 as there are 2 bedrooms), 2-bedroom basement suites rent for $1200. 4-bedroom homes rent for around $2000-$2500; there are not many of these full houses to rent, and the ones I've seen have been larger and arguably nicer than mine - although I have a very big back yard and am a 7 minute walk from the best park in town. My neighbor is getting $1500 for his top-level rental, and the neighbor on the other side was getting $1000 for the basement, and I believe this place was fairly run-down.

Renovations to be done:
1. Add a kitchen.
2. Add a door separating the laundry room and the rest of the basement suite.
3. add laundry - There is a gap between the downstairs bathroom and the larger bedroom that would be perfect to throw laundry; the wall is open.
4. sound proofing  & lighting - I can hear the TV upstairs when I'm downstairs doing something. I suspect it would be good to get the ceilings insulated, and I could get pot lights installed at the same time.
5. finishing - the laundry room/room with my hot water tank is concrete-block and foundation. I could finish this, but would you?
6. Cold room finishing - there is a small room off the basement living room, approximately 8' deep by 12' wide, that as a suite I think would be better utilized if I took this wall down and extended the living room, or finished it and have it work as a small bedroom (there is a window). What would you do?
7. Heating - I'm not sure what to go with here. There is ducting into the basement, but it does tend to get cold; and we live in a cold part of BC.


It would be approximately 600-650sq feet. The flooring, paint, bathroom are all new. What would you do? We are moving to a city 8 hours away.

[ToTheMoon]

A key piece of information is missing here: what could you sell the property for? This will help determine if it is worth keeping as a rental.

Did you say that you are located in BC? If so, I can pretty much guarantee that you are better off selling it as far as $$ go.

[Healthie]

A key piece of information is missing here: what could you sell the property for? This will help determine if it is worth keeping as a rental.

Did you say that you are located in BC? If so, I can pretty much guarantee that you are better off selling it as far as $$ go.

I bought for 201k in 2018; recently got an appraisal at 297k when I refinanced for a better interest rate & invested the money. I still have some money I was going to put into my TFSA/RRSP in January to max them, but I could keep it and spend it on putting a suite in. With these numbers, do you think selling is a good idea, & why?

[SunnyDays]

Apart from the numbers, do you want 2 families living in the space?  From what I've seen around here, whole houses seem to attract better tenants than 2 suites.  And if the difference in the two scenarios is only $200/month or so, do you want the added hassle of finding new tenants more often, plus the additional wear and tear on the house?  Personally, I would try it with just a single family first, and if you decide down the road to put in a suite, you can always do it then.

[affordablehousing]

Sounds like a fine rental, figure maybe $2500 in rent, minus 10% for the property manager, minus taxes, insurance (goes up for a rental and two family), vacancy on turns, replacement reserves, travel costs for when you have to go there, and utilities if any and you might net $2,000 a month. It's probably $25,000 or so to get the basement into a rentable fashion. It may make sense to hold if this is a small part of your net worth and there's a possibility of appreciation.

[Dicey]

In my part of the world, supply chain interruptions are wreaking havoc on construction jobs of all sizes. Small examples: DH is redoing the hardscaping in our yard. Retaining wall caps that were $3.00 each pre-pandemic are now $7.88 apiece. Last week the perforated drain pipe that DH had priced out a few days earlier jumped from $59.99 to $99.99 at every supplier. If you undertake this project now, you and your contractor, if you can find one, are going to be facing a myriad of price increases and material delays or total lack of availability.

Two more tidbits: I retired from the floor covering business. I stay in touch with one local former customer. They just told me that they have inserted a disclaimer on all their jobs that all prices are subject to change and delays, even with a signed contract. I had reason to chat with them because a friend is buying a condo and asked our opinion on some upgrades she was considering. The estimate from Lumber Liquidaters to put LVP upstairs and on the staircase was $4500. I suggested she get a bid from my former customer for comparison, so I was giving them a heads up. Couple of days later, friend tells me that LL had called her back to say the estimate was incorrect and was for materials only. Installation was going to be another $4,000. Oof.

Only you can decide if it's worth it to you. But this will never happen if you have your money in VTSAX or similar. Our rentals are in a 55+ community, eight hours away from our home (ring a bell?). All of our current tenants are over 80 and prefer to snail mail checks, which we're used to. We have a P.O. box, because mail theft is a huge problem where we live. When I checked the box this week, I discovered an empty business envelope. The left side was torn off, including the return address. I recognized handwriting and the postmark. Yup, the December rent check had been stolen.

We love our 55+ community rentals because seniors who are former homeowners make model tenants. We have few of the problems that one often hears of with renters, but shit still happens.

There are a lot of things to consider if you choose to go down this road. Or, you could just set it and forget it.

[Jon Bon]

Sounds like a fine rental, figure maybe $2500 in rent, minus 10% for the property manager, minus taxes, insurance (goes up for a rental and two family), vacancy on turns, replacement reserves, travel costs for when you have to go there, and utilities if any and you might net $2,000 a month. It's probably $25,000 or so to get the basement into a rentable fashion. It may make sense to hold if this is a small part of your net worth and there's a possibility of appreciation.

It does? Did I miss something?

$2500 in rental revenues somehow manages to net $2000 monthly? Shoot taxes and insurance would be at least that. Let alone management and vacancy, and that is if nothing ever goes wrong.

Something else to consider is that your house will never been in as good of condition as it is right now if you go the rental route. Even the best renters are hard on houses.

Betting on appreciation makes you a speculator, you might do great, but you also might, you know, not. I'd want a bit more information but I am sure leaning sell.