Living with tenants
In an age of increased housing costs and isolation, more and more buyers are considering the possibility of renting out a portion of their homes. There are some real benefits to doing this, including the obvious benefit of additional income that can help cover mortgage payments and home expenses. Renting can also provide companionship, and even aid with some of the home upkeep. While there can be numerous benefits, there are a variety of factors to consider before you bite the bullet and start tearing apart your basement or slapping down a downpayment on a home with an accessory apartment.
When renting out any portion of your home, it’s important to remember that you will lose privacy to some degree or another. Tenants have the right to use and enjoy their home and common areas, so you have to share. If you intend on sharing space (i.e. yard, laundry), establish expectations before a lease is signed, especially if you know you’re going to be sensitive to things such as smoking, drinking, and visitors.
Another consideration is noise. If you or your tenants have small kids or enjoy loud hobbies, noise can be an issue with shared space. Being realistic with your expectations and looking into soundproofing options in advance can make a world of difference when weighing the pros and cons of taking on a tenant.
Pets are another thing to consider. Your adorable dog howling at cars driving by may not be perceived as “cute” to your tenant, or vice versa. With standardized leases in Ontario giving tenants the legal right to owning a pet in your space unless you have a legitimate reason to refuse them, it’s worth considering how you will navigate noise, pet hair, extra laundry, and animal waste that may come with the territory.
Utilities provide another common area of frustration. If you intend to share a water heater between units, be sure you’ve considered if the capacity of the heater can handle the increased usage. The last thing you want is to be mid-shower when the water turns ice cold because your tenant is using the washing machine. Consider looking into temperature control valves that can help mitigate these issues. If you only have one utility meter, you also need to consider how you will split the costs fairly. Will you pay all the bills and set an inclusive rent price, or will the tenant pay a percentage of the utility costs? When looking for homes, there may be some duplexes that are separately metered, but it is less common with accessory apartments.
Lastly, if you are considering renting to tenants there is increased risk and liability, so you will need to adjust your home insurance policy. There is some risk in acquiring tenants, as they may accidentally (or not so accidentally) cause damage to the space. Life happens, so some maintenance costs should be anticipated, but vetting your tenants (especially if you plan to share a space with them) can help manage some of these risks. There are good tenants and bad, and for those of you on a tight budget you need to account for the possibility that there may be late or missed rent payments. This can be a large financial liability, especially if your budget doesn’t allow for it, so go in with your eyes wide open.
If you are thinking of purchasing a home and renting out a portion of it, whether it be a room, an accessory apartment, or a section of the home, take some time to consider the risks and rewards, and weigh if the pros outweigh the cons for you and your situation.
Have questions or want to chat through your options? Send me a message and let’s sit down together!