What to do with my starter home? (suite or full-house rental?)

[Healthie]

Hi everyone,

I bought my house in Sept 2018 for 201.5k. It's 1650sq feet, 4 bed/2 bath, fixer-upper. Here's the list of reno's that need to be done:
1. new fence all around
2. bathroom reno downstairs (upstairs one done in December)
3. convert portions of basement to finished basement (there's an unfinished workshop room downstairs, plan is to convert to a den)
4. baseboard heating.
5. Yardwork (very overgrown, lumpy grass).
*6. New stairs to basement entrance (would like to convert into wall as there is an alternative basement entrance for a suite).
*7. Foundation waterproofing (estimates of $17k; I'm not completely convinced the house needs it, but the basement does smell wet and had signs of wetness when I bought).
8. Rip carpet out of basement, put laminate down.
9. light fixtures/recessed lighting.

I'm happy to do most DIY homeowner things (tiling, hanging drywall, painting, flooring, yardwork, fencing). I would like to own a rental house, this house questionably needs the foundation done (I'm thinking I will do all the other things to prevent water from coming towards the foundation first), and I initially planned to put a suite in and live upstairs with a downstairs tenant. But: To put a kitchen in requires knocking down a non-weightbearing wall and converting a bedroom into a kitchen, and sound transfers really easily between the floors. In addition I could get roughly $900/mo for a 1 bed, 1 den basement suite and $1200-1300$ for a 2 bedroom upper suite once I move. I'm thinking of just renoing the house into a 4-bed, 2-bath, which I could get $1800-2100/mo for, and not have the hassle of two separate tenants.

What would you do with the house? This was the cheapest house I looked at; houses with a move-in-ready basement suite sell for low 300ks. My tentative thinking is to keep it a 4-bed, 2-bath, find a small house for myself and rent this place. I can get approved for a 450k+ mortgage once I have a full-time position.

[Car Jack]

You need to figure out how/why water was/is/might be getting in the basement.

Is it really just seeping in from surface water?  Is the grading really flat, possibly letting water just seep in?  Do you have gutters and is the water actively directed away from the house?  Is there a high water table seasonally?  Is the house on a hill with water coming in/under your foundation?  Do you see micro cracks in the floor (after the carpet is out, you might find them) where water is pushing up from under the floor?

Certainly an indoor channel system under the floor leading to a sump pump will solve this.  But even easier (maybe) is to add a system outside the foundation, if a pipe can lead away, going down grade to some exit.

[clarkfan1979]

Putting in a kitchen legally will be problematic. You will need special permitting that typically is not granted. However, you could rent it out as a "mother-in-law suite" in which there is no full kitchen. You typically can have shelves, but no cabinets. You can have a full size refrigerator. Also no oven. In lieu of oven, I would provide microwave, pressure cooker/crockpot and some type of electric skillet and George foreman grill. Maybe a bbq grill on the patio.

[Papa bear]

Are you expecting major appreciation? Because if you do all these repairs (big$$$) just to get to 1800-2000/month in rent, you’re going to have a poor rental investment.  As it sits now, it needs to get 2000-2200/ month to be decent.

How much more money do you want to sink into this place? 50k? Adding an entire unit is going to be a major project.   

If you can put 50 in and sell for 300k+ then this is a better flip.  Then go find something else that gets better rents.



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