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what should i do? legalise the basement spending $60K?

Should I legalise the basement taking $30K grant ?

  • yes

    Votes: 0 0.0%
  • no

    Votes: 1 100.0%
  • keep on renting as is?

    Votes: 0 0.0%

  • Total voters
    1

manojgft

0
REIN Member
Joined
Mar 11, 2014
Messages
26
Hi All,
I am in a very cross road and confused what to do. I am from Regina , and I am doing the basement renovations as I had some issues with the basement walls.

The basement had a 2 bedroom suite which I rented for $1000 for last 4 years after I bought in 2011. It is my principal residence.

Now as I wanted to renovate the full basement , the city of Regina is asking me to make it a legal suite ( if I want to rent it out) which will cost me $60K + . If I don't legalise it will cost me $40k+.
I have $30k as my resource. I can manage another $10k myself.

I told the permit department, it was a full suite since I bought it . But they won't allow a kitchen anymore without a legal basement application. And the legal basement should be 40% of the main floor. My basement was approx 850 Sq ft carpet area.

But good news is they have a grant program from which I may get a maximum grant of $30K. And that is also subject to few items.Bad news is I have to rent the basement to a low income family at max $1025 for next 5 years. And interestingly the gross income should be below $41K which is kinda funny.

Here is what the officer wrote me today " We will not release funding until the completion of the suite and we receive: original invoices; Occupancy Permit from City of Regina; Original Tenant Income Declaration/Consent form showing you have placed an eligible tenant; confirmation from your insurance provider that Saskatchewan Housing Corporation has been added as a loss payable".

The basement will rent anytime for $1000 whether legal or illegal.

I asked 2 realtors today, they told legal basement suite would not bring any extra value at present market scenario.

So, now what is my best option?
 

Gene

0
Joined
Sep 4, 2007
Messages
56
Hi this seen like a very large cost to have a legal suite. Have you gone out and got quotes. I done a number of these legal suite in Fort McMurray. But much lower that that price. Are you planing on doing the work. Or contracting it out. Does it have its own separate door to the basement or are you adding it.

How long are you planing on owning this home. And if you did go on a plan for low income what is the market like in that area.
There is alway value in you home with a proper legal suite. One would be a piece of mind knowing is conforms. I would get more quotes from a contractor. And if they came in to high. I break it down and contract and manage it myself.
 

manojgft

0
REIN Member
Joined
Mar 11, 2014
Messages
26
Can I have your phone number?
My number is 3065504819.
Can we chat over phone?
 

Matt Crowley

0
REIN Member
Joined
Dec 14, 2013
Messages
980
Good question. In today's market I would not develop.

Whatever you do, do not continue renting out the suite illegally! You would be astonished with the penalties they can hand out to non-conforming suites. In Edmonton it is ~$300 / day. Seriously.

Your quote sounds a little bit high. A full gut and redo of a basement is around $45k in Edmonton if you hire a GC. Add $5k if you need to update power. $7-10k if you need a separate entrance. Add $7k if you need to add a furnace (includes ducting).

Your Realtors are wrong. Legal suites are obviously better than illegal. Illegal suites are not an income source, they are a liability. I would ask for some comparables for recent legal / illegal suite sales.

The grant looks interesting. The requirements sound similar to Edmonton. However, in Edmonton we do not have any restriction on the rent we can charge with our Cornerstone II grant. The only limitation we face is the incomes for individuals / families we rent to.

Does the house cash flow as a single unit? That may be an temporary option.

In my mind, the question you are looking at here is all about yield. So if you put $60k into this property you are basically foregoing the possibility of picking up a legal suited house. Pulling equity out of a house once you put in a legal suite is not an easy thing to do. Usually at least 20% of that cash is lost and tied up into the property. In today's softer market you are probably better to pick up something that is already suited legally.
 

Sherilynn

Real Estate Maven
REIN Member
Joined
Oct 22, 2007
Messages
2,803
As for the grant, the restrictions aren't that bad. You will likely find 80% of the basement suite demographic would qualify. Most of our inquiries were from couples where one was working and the other was in university, or from working single parents. We had a few inquiries from tradesmen who work out of town for 2 weeks at a time and wanted a cheap, quiet place while they were in town - we had to refuse them, but they were a small portion of the inquiries.

If you are able to rent for the same amount with or without the grant, the grant provides half the cost, and you can't rent the suite without legalizing, then legalizing through the grant sounds like a solid plan. You would recoup the $30k out of pocket in less than 3 years.
 
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