Crash Course to real estate royalty
Homes in Canada are expensive. In the outlying GTA, the average price of a condo is over $600,000—a single detached home is approaching $1 million ($914,000 in October of 2018) and a staggering $1.31 million for the same product in Toronto proper. With the time and financial costs required to commute, which CMHC estimates at an average of between $400 and $800 per month—the perceived savings of living in a bedroom community and travelling into the core for work is seeming less of an ideal plan—especially when you factor in our weather and gridlock woes that are only worsening with intensification. One way to help bridge the gap, or help transition from condo living to a low-rise product, is to subsidize oneself by renting out a secondary suite within the building, or even outside of it, with the new option of laneway housing. In order to service the $311,000 to $386,000 of additional mortgage, you would hypothetically require to upgrade from a condo to a house, or to move from the suburbs into the city, you would need to add roughly $1,500 to $1,900 extra per month to cover it. No small amount, I know.
CAPTION: Before (Photography by Eurodale Development Inc.)
CAPTION: After (Photography by Andrew Snow) |
CAPTION: After (Photography by Andrew Snow) |
Rent on the rise
Coincidentally, the average rental amount for a one-bedroom apartment in the city of Toronto has also been climbing, and now sits at $2,200 in the core, and $1,200 in the outer lying GTA. If you look at those numbers, they start to offset each other, in some instances, creating a cash-flow-positive position. This means, for a bit of legwork, creating or finding a home with a secondary suite could be your ticket to upgrading your living situation by either transitioning from a condo to a singlefamily home, or by reducing or eliminating your commute. Does the thought of becoming a landlady or landlord sound good to you? Read on.
Before you sign the lease
Secondary suites or dwellings are permitted As-of-Right via provincial legislation in Ontario. Every municipality has their own governing rules that you want to familiarize yourself with—here are some of the keys.
A permit is required to create one, and is only allowed in a building aged five years or older. If an existing unit, Municipal Licenses & Standards, Fire and Electrical Safety Authority must have signed off for it to be legal. Minimum ceiling height 6’5″ for at least 50 per cent of the area, with at least 97 sq.ft. of space per occupant, so the space doesn’t have to be huge.
Fire egress (to escape) and firefighter access (to enter to save you) are generally 3.8 sq.ft. and 1.0m clear respectively, with some fine print nuances that are important.
Fifteen to 30 minute fire separation and a Sound Transmission Rating minimum of 50 must be achieved for safety and privacy. Interconnected smoke alarms with the main dwelling unit are also a must for optimal safety and the lower separation. Sprinklers are the best, but carry a high upfront cost.
The unit must be smaller than the main dwelling, and if there is parking, the accessory dwelling must also have parking, except in the case of a laneway house, which negates all needs for parking at the property completely, other than for a pair of bicycles.
CAPTION: Before (Photography by Eurodale Development Inc.) |
CAPTION: After (Photography by Andrew Snow) |
Landlord training
Once you have a compliant unit, you then need to learn the ropes when it comes to being a landlord. First, advise your insurer in writing of the tenancy. Second, read the new Ontario standardized residential lease and develop your own set of individual lease terms to insert under section 15 to protect yourself and the property, and ultimately help govern the relationship. Spell out rules around guests, smoking, parking, access to and/or maintenance of the grounds,and utility splits, so it is clear and concise. Then, when selecting your tenants: Exercise caution. It’s one thing to rent a unit to a tenant, it can be altogether different to rent a space connected to your personal home to someone. Familiarize yourself with the laws and rights of the parties, which will rule your new business relationship. The website landlordselfhelp.com has great videos and podcasts that cover many potential hurdles you could face.
Know the rules
Thinking short-term rental such as Airbnb, VRBO, and the like? Not so fast! Many municipalities are working through by-law changes to restrict them, as in Toronto where the new bylaw is still under appeal, but can have large implications on the compliance and viability of your unit as a legal, short-term option. Setting up furnished, vacation-type rentals can be costly; therefore, you want to be sure you don’t get shut down if you are not fully compliant after having spent thousands of dollars on furniture, artwork, and supplies.
The payoff
Setting up a secondary suite has huge benefits to help pay down a mortgage. It also allows you to afford a better home, or a home in a better area, increase income, and pay increased dividends at the time of a sale. It can also be a lot of work, and as with anything, what you put into it, you will get out of it. The more seriously you take this business venture, the smoother it will run, and the better the yield will be for you in the end.
When planning your own secondary suite, remember there is real value in working with a professional to design and build the space. We recommend you start your search at the relevant professional associations to explore your options, including BILD & RenoMark—the home of the professional builder and renovator, to find the true industry professionals to help guide you to success.
Happy renting my Lady, my Lord.
 |
Brendan Charters is Partner at Toronto Design-Build Firm Eurodale Developments Inc. – 2017 OHBA Renovator of the Year.
@eurodalehomes (416) 782-5690 |
Customers may not feel comfortable asking you for discretion, but they always appreciate it. Unfortunately, in today's world of social media, coffee shops used as offices and cellphones that record anything anywhere, confidentiality seems to be backsliding into a state of dangerous decline. That's why you can gain tremendous trust with customers by simply following these five unwritten rules of customer confidentiality. Ignore them at your peril.
Rule #1: Know that you are in a position of trust: We've all heard of doctor/patient confidentiality and lawyer/client privilege. Doctors and lawyers are sworn to secrecy about their customers' affairs for good reason. Your customers deserve the same discretion from you. When you talk to others about your customers, assume that the customer is in the room with you, or will read everything you post or write about them. If what you're sharing isn't complimentary and publically known, then keep it to yourself.
Rule #2: Starbucks isn't a confession booth: I once hired a consultant who was based in another city to do some work on our website. We scheduled a conversation about my brand and target market. To my dismay, he logs into the call from a coffee shop. Throughout our conversation, I'm seeing customers come and go in the background. Not only was it distracting, it felt like a violation of my privacy as a client. There are good reasons why lawyers and accountants won't host you in their office. Instead, meetings are held in a private room. One reason is that you shouldn't see confidential files lying on their desk from other clients. Another reason is so your meeting will not be seen or overheard by others. Coffee shops are for casual coffee, not for doing business.
Rule #3: There's a difference between small talk and prying: Ever have this happen to you in a restaurant while you're paying for the meal: the server is standing by your table waiting for you to input your credit card PIN on the portable device and asks, "So what are your plans for the rest of the day (evening, weekend, whatever)?" Pardon? When did our relationship as patron/server evolve to the intimacy of me needing to share my weekend plans? The key to making small talk sound natural and appropriate is context and relevance. Unless you've been chatting about weekend plans with that person, better to stick to safe topics like the weather.
Rule #4: Yes, your cellphone conversation is annoying: People who talk at length on cellphones around other people sound like jackasses. Seriously. It reflects a total lack of self-awareness and distain for basic civility. It also tells people around them they don't respect the privacy of the person on the other end of the phone. They're damaging their own reputation and are too oblivious to realize it. Don't be one of them. Move to a quiet area and lower your voice.
Rule #5: Strong feelings don't necessitate expressing them: This is perhaps the most important confidentiality lesson at work and in life. We can't unsay, unpost, or unTweet our opinions and observations. No doubt you can think of numerous examples at work and in the news where a little discretion and self-restraint would have saved significant fallout. While it's tempting to be drawn into adding our two cents to a discussion, perhaps the greatest contribution we can make to the relationship is remaining silent. We hope in turn that when we say or do something less than brilliant, others won't share it with the world. Ironically, kindness and maturity are often best reflected — and trust is sometimes most strongly earned — by simply shutting up.
