Basement Apartment?

I was recently asked a very good question by a family friend (thanks Laurie) about whether or not it made sense to add a basement apartment to your current dwelling. Problem is, there is no strong answer. Arguments can be made for both sides of this discussion. First the pros. For the right buyer an added apartment is an asset and would command a higher sales figure. That added income can certainly offset the expense of the higher mortgage rates. Back in the early 80s I had a friend that put an apartment in his basement to augment the monthly debts because the mortgage rates had ballooned to almost 25%. Adding the extra income saved his bacon. With the current lack of available housing, it makes sense to maximize all the space we can. Local and regional governments have placed a priority on intensification for future development. Sadly, the days of the building lots in-town that were 70 by almost 200 feet are pretty much gone. In Toronto they have added lane-way houses to the housing repertoire. So that certainly works in your favour. You should follow the proper procedures and have the apartment fully legal. Ensure you have proper egress and fire codes are adhered to. Makes it way easier to sell and command a better dollar in that sale.

Now the downside. If you want to do this, and do it right, it would cost a fairly good dollar to add the apartment. You would need to find a reliable and trustworthy contractor that could guarantee a timely finish for the job and do it properly. Then there is the age old hassle of being a landlord. If you have a relative (aging or otherwise) that wanted to rent the place, you automatically have a leg up in the process. Finding the right tenant that will be reliable, quiet, pay the rent on time AND stay for longer than a year is really not an easy thing to do. But it CAN be done. Last point to consider is how you feel about sharing your living space. Although there are ways to mitigate the feeling of being put out by sharing the space, the bottom line is for you to decide. Does having someone share the expense help your monthly cash flow? As for utilities, that is entirely up to you whether you want to include that expense in the monthly rent, or have the tenant pay their own portion. Ultimately it is your call, but if you decide to do this prepare to be in it for the long run.