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Adding a rental unit to your home

With recent economic uncertainty and job losses, coupled with rising house prices in some parts of the country, it's little wonder people are looking closer to home, or, more specifically, at their home, as a means to generate income. Turning a primary residence into a partial income property by adding a suite or basement apartment is a popular option for homeowners, but doing it right requires expert advice and a hefty investment.

One of the biggest draws is being able to supplement your mortgage payments. "We see it a lot with first-time buyers because it allows them to afford a bit more house," says real estate insider Jennifer Palacios, a member of the Julie Kinnear Team in Toronto. However, she stresses that projected income from a rental unit isn't factored in when applying for a mortgage and won't increase the amount for which you qualify.

"It's a convenient additional income for any homeowner," says Ivan Koval, president of, a southern Ontario contractor referral service. He says the request for self-contained units in single-family homes has risen steadily since July 2000, when the City of Toronto's second suites bylaw came into effect.

Prior to this, there were plenty of basement apartments and such out there, but they weren't considered legal. The new bylaw allowed for second suites in all single-detached and semi-detached houses throughout the city, as long as they complied with certain conditions.

Not all municipalities allow second suites
When considering whether to build an income unit, the first step is determining whether your municipality allows for such units and the conditions involved. While second suites, basement apartments, granny flats and in-law suites, as they are sometimes known, exist in houses across the country, it's rare these units are legal or conform to safety requirements. Many municipalities do not allow for such income units, and those that do require them to be registered. To find out whether your planned unit is feasible and which permits are required, contact your local urban planning department.

"There are huge risks in not doing it right," says Koval. That's why it's essential to ensure all rental units comply with not only zoning bylaws, but also relevant fire and building codes. "The fire code tends to be the biggest obstacle -- it's not easy to comply with. I would hire an independent fire inspector to take a look at the house and make recommendations on how to do it right."

Safety first
Provincial governments set the fire codes, so criteria vary depending on where you live; however, the goal is the same: protecting the safety of occupants.

There are four key components included in most fire codes. The first is fire containment, and the idea is to contain a fire in the unit where it starts so as to reduce damage and allow people to get out before it spreads. This means materials used for walls, floors, ceilings and doors should meet certain ratings criteria that indicate how long they will withstand a fire before being destroyed. The minimum requirement is usually 30 minutes.

Another important element of the fire code is known as means of egress or escape. This can be taken care of with a separate entrance; however, in the case of a common entrance, a whole new slew of rules apply.

"In private residences, basements are usually the most convenient because it's easier to provide that (separate) entrance," says Koval, adding that all units are required to have smoke alarms. If the units share a common entrance, the smoke alarms have to be interconnected.

Also on the fire front, one of the most important considerations is electrical safety. All work should be done by a certified electrician and inspected by the proper local authorities.

(continued on next page)
-- Posted Mar. 5, 2010
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