How to Rent our Your Basement Suite: Part I

Some people have been writing to me asking about an update on the status of my basement suite.  I didn’t want to write about it prematurely because I hadn’t rented it out at the time.  Now that I have some tenants on a one year lease, I feel more comfortable sharing my experience, so that my words don’t bite me in the a** like last time. ;) (In case you didn’t know, I was VERY excited to get student tenants who were 110% interested- or at least seemed to be- and they flaked out last minute and didn’t respond to my calls)

Many people in Vancouver have basement suites and mortgage helpers to help pay down their mortgages faster.  Getting a mortgage helper can be a pain in the butt, and some people would rather not bother with the extra headache.

Here are a few steps to start you off on the mortgage helper path:

1.  Think about your goals (er.. wants) before you list the ad:

  • house keys Pictures, Images and PhotosDo you want a one year lease or do you want to rent month to month?
  • If you are renting month to month, are you comfortable with a possibly lengthy period of no mortgage helper?
  • Who do you want to ideally rent it to (obviously you can’t be discriminatory) but if you prefer students you can state that in your ad (the downside to students is that a- they are likely poor, b- they may have crazy parties, and c-they may leave during the summer, leaving you with an empty basement)
  • How much do you want to list the suite for?  Looking at other ads in the neighbourhood may help you decide where to start.  If you price it too high, people will expect more and you may get more complaints and demanding tenants who want to get their money’s worth.
  • MOST IMPORTANTLY, make sure you have a significant cash cushion (aka emergency fund) in case you need to repair something (you never know when the stove is going to break or you need a new toilet).

2. Is your basement suite up to snuff?

Many people in Vancouver live in basement suites but do not want to live in basement suites that are moldy, dark, and damp.  Try your best to make your basement suite liveable (would you want to live in it?) and your tenants will be happy.  We got a new kitchen corner and created a new bathroom.  Telling your potential tenants that the shower has never been used and is brand new might attract them to rent it just so they can the be first to use it. ;)

Lots of people have illegal suites (that means that your home is not up to code and if someone reports you, you’re in deep doo doo).  Often landlords get reported to City Hall by neighbours who are annoyed with the increased noise, extra traffic, extra strangers mulling around, or even by an angry ex-tenant themselves.  The consequences of this can be pretty dire- if you’re not up to code, the City may ask you to convert it to be up to code, or they may shut down your rental.  Converting a suite into a legal suite though, can be very expensive.  You would also need to purchase an annual permit to maintain your legal suite- this doesn’t cost very much ($50) and the plus side is that it can look very official hanging on the wall.

Another thing is to make sure there is sufficient insulation between the basement suite and upstairs (though sometimes you can’t help this).  You don’t want to have angry sleep deprived tenants if you can help it.  Adding more carpeting and fabric within the basement suite rooms and on the upstairs floor can help decrease the sound transfer.

You will probably still hear mumbling and or muffled conversation.  Try your best not to eavesdrop and block the paranoid thoughts in your own mind that your tenants are listening to you move around upstairs.

3. To include utilities or not… that is the question!

Are you planning to have the tenants pay a portion of the utility bills?  Or are you planning for them to pay a flat monthly rate and you can absorb the cost?

The PROS to having the tenants pay a portion of the utility bills is that they will have more responsibility to decrease electricity consumption (you won’t see lights turned on  and laundry machines going 24/7.. nope..! You know why? Because they’re paying for it!)

The CONS to having tenants pay a portion of the utility bills is that tenants find this annoying and may not be attracted to your rental because of this.  Everyone wants guaranteed payment per month so they can budget.  If it’s a wild card, they will be less likely to commit to your rental.  This is what we found with our ads.  We initially wanted 50% of the utilities and no one bit.  Then we included the utilities and found great tenants who were willing to sign a year’s lease.

The CONS to paying for your tenants electricity is that they MAY (depending on the type of tenant you rent it to) take this as “all you can use” and you may see skyrocketing bills because of this.  My mother (she is quite the nonassertive individual) has a tenant in one of her rental properties who plays the radio for most of the day for his pet birds.  Her electricity bills are pretty high because of this.

 4. Take Lots of Pictures

Taking pictures (with good lighting in the pictures) is important to show in your ad.  Just like you’re less likely to buy something on eBay without a picture, most people are less likely to follow through with a rental ad without a picture.

Take pictures of the kitchen area, the bathroom, and the bedrooms.  Just like bathrooms and kitchens sell homes, bathrooms and kitchens are very important to potential tenants.  Have measurements ready of the bedrooms in case people ask about the size of them.

Stay tuned for Part II of How to Rent out Your Basement Suite.

Same Bat Channel, Same Bat Time!

Readers, any tips on initiating the land lording process?

About

Young is a writer and former owner of Young and Thrifty and the main "twitter' behind Young and Thrifty's twitter account. She lives in Vancouver, BC and enjoys long walks on the beach, spending time with her anxious dog, and finding good deals. If you like what you read, consider signing up for email updates.

42 Responses to How to Rent our Your Basement Suite: Part I

  1. Great job getting the extra help on the mortgage. I think renting out the extra room is a great way to get your feet wet in the rental business. One of my friend rented 3 rooms in his house out and it was almost enough to cover the mortgage. He lived rent free and got to enjoy the appreciation of the property.

    • @retireby40- I know, I have a friend like that, she has a home with three levels (and three separate entries), the income from the rental suite is covering their mortgage and she’s still only working part time and loving it.

  2. Renting out the extra room is great but knowing myself, I would not want anyone I don’t really know living in my house. I am a difficult neighbour because I like things certain way. I probably would be a landlord from hell! :-)

    • @Aloysa- lol I doubt it! I think I’m becoming the landlord from hell by emailing them so often (they probably think I’m a stalker and annoying haha). I actualy LIKE the idea of having someone downstairs because I know if something scary happens haha there will be someone there!

    • @SRL- I surely will :) It’s very very common here in Vancouver because of the high cost of housing, but seeing as my BF and I are only needing half the house right now, why not rent it out?

  3. Hi Young,

    You might want to see an old movie called Pacific Heights. (1990)

    A yuppie couple buy a large house in an exclusive San Fransisco neighborhood. They renovate it and plan to rent two apartments on the first floor to cover the costs. A prosperous looking man moves in but is not the ideal tenant. He never pays any rent, drives the other tenants away and systematically ruins the lives of his landlords.

    Good movie.

    Cheers,

    Brian

    ps. I sent an e-mail with a link for an idea why CI insurance may be interesting. Don’t know if you got it. See below. From canoe.ca

    http://cnews.canoe.ca/CNEWS/Features/2011/10/20/1280-Death_rates.jpg

    • @Brian- LOL I just saw the trailer but the scary music and the voice over got me too freaked out to finish watching it. Michael Keaton plays a good creepy tenant for sure. Well, as long as the tenant isn’t a serial killer (they are two females) and pays rent I’m a happy camper. So far, they are very accomadating and have even been buying some things like light bulbs etc. themselves!

  4. Y&T My partner and I really lucked out with our tenants! We are close to UBC, so after our house reno, we knew we wanted to rent out to students. We have a married couple living in the suite, they are quiet grad students and they are worth gold! I hope they stay with us for a long time.

    But we had to screen a few first ;)

    Cheers
    The Dividend Ninja

    • @The Dividend Ninja- Ahhh I wish I lived closed to UBC! That are is like landlord heaven! Graduate students are the best. We actually almost wanted to buy an old house near UBC but then the house actually went for $200K over the asking price (!) then I realized the asking price was just so that a bidding war could be fueled. I would be wary of undergraduate students, but graduate students are less party animals. Are they on a yearly lease or month to month?

  5. Re: electricity. If you’re going to charge separately, then do it properly with a separate meter, or at least pick a percentage that’s a little more fair: I think someone moving into a basement suite is going to see that 50% is now subsidizing the rest of the house.

    Even aside from the economics, but from the fact that some people are just inherently bothered by the idea that others may use a different amount of electricity, a separate meter is a good idea. I have a friend who gets annoyed if the tenants leave the porch light on when they go out to dinner; but it’s only a bit of electricity, and how are they supposed to see the door when they come home if they don’t? Like with your mom: unless this is a wall-to-wall booming disco sound system, a radio is probably only like 20W. Even leaving it on for 24-7 would only increase her electricity bill by ~$1.75/mo. Yet despite the trivial cost, just the idea of it has gotten to her enough that she must have complained to you about it, which then managed to sneak its way through into the blog.

    One final anecdote: a friend found out her tenant had a space heater, and asked me to calculate the damage. A space heater is a legitimate power hog, so it was something like $50/mo, and she wanted to evict her tenant over that. I was like “whoa, whoa, you want to evict a clean, quiet, paying tenant, over $50/mo — and just the winter months at that?” “Yes, she’s stealing my electricity. Stealing! I should throw her in jail!”

    You need a certain personality to be a good landlord.

    The downside to a separate meter though is cost: there’s a fixed monthly fee for it, that for small suites can be as much as the electricity in the first place, so your tenants will want a discount of that much relative to market rent.

    • @Potato- Thanks for visiting HP! Yeah, I know. Unfortunately we can’t separate the meters because our ceiling height is too low to legalize it (hence the potential frown by city hall- hope they’re not reading HA). We already went through this option with the electrician. But yeah, I agree that 50% is too high, esp. if there are things like the porch light and the garage. I think that’s why we’re opting to pay for the utilities and see how it goes.

      Haha I can’t believe your friend said her tenant was stealing her electricity and tried to evict them! Did your friend have control over the thermostat from upstairs?

      I agree- landlording isn’t for everyone. You have to be chill yet firm, with boundaries. My boyfriend gave the landlording responsibilities to me. My dad is a landlord to a couple residential properties and apartments, and he seems to enjoy it and be pretty effective at it. Though sometimes you can’t help but piss off certain tenants that seem to get easily pissed off anyway.

      It helps to read some of the “landlord rules” before stepping into this domain, I think.

  6. I think Potato hit the nail on the head: it takes a certain personality to be able to be a good landlord.

    Which is why it’s something I would never consider doing. When I was little, my mom managed a house that my uncle (who lived in Hong Kong) bought as an investment property. It was an hour’s drive away, and she had to handle everything with the renters. They could be trying at times, but weren’t the worst tenants in the world– still, even the mundane tasks like collecting rent and performing basic maintenance and repairs got to her.

    I’m also not much of a people person when it comes to personal matters (work is a different story), so I definitely wouldn’t want to be involved in potential conflicts with someone living in my own home.

    So… we opted to live in a more affordable place, and here we are now, in our trailer park ;-)

    Seriously, though– kudos to you on your endeavor, and I hope it continues to work out well!

    • @Helly- Thanks Helly I hope it works out well too (and thanks for visiting!)! I was getting a little dejected with the low responses from people who came to look at it.

      An hour drive to an investment property is a LONG time. I would probably never cut it. The basement is easy enough. If I had a few properties and had a very flexible job (or perhaps landlording could be the primary job) then I’d do it, but having FT work and dealing with tenants can be very difficult.

      I’m actually enjoying the basic maintenance part, we’re learning a lot along the way about how to fix things and becoming more “DIYs” around the house.

  7. Used to be a landlord, now I own REITs instead :)

    Good post and you’ve highlighted many good tips for folks, to get started.

    Having pictures can’t be emphasized enough – in marketing the unit. Make them nice and glossy and use as many sites as you can to market the unit. You’re always facing competition when trying to rent a unit.

    Like other comment above – I wish we had a basement to rent out because I want Scott Macgillivray (Income Property fame on HGTV) to come and reno our basement. That guy does awesome work!

  8. Nice way to earn extra money. You can even rent out your spare car if you have. Or the parking for that matter. I have a friend who lives in downtown Chicago, he rents out his parking during office time and earns handsome money.

    • @SB- Agree! There are lots of great ways to earn extra money, especially if your car, parking lot, or suite is in a good location :) If I lived in an apt downtown I would definitely rent out my parking space. One could fetch a handsome amount, I’m sure!

  9. I completely agree with this strategy. I wouldn’t be up for renting out a room but am definitely down for renting out a basement suite. The utilities issue is a sticky one. I’m sorry that your mom is being taken advantage of due to tenants exploiting her generosity. BTW, congrats on getting the lease signed :)

    • @Roshawn- Thanks! Yeah, I would not be up for renting a room. I would just never feel comfortable with someone else around. If I was renting I wouldn’t rent a room in someone else’s house either.

  10. @Y&T: Chill but firm is a good way of putting it. You need to keep the rent flowing, but recognize that the place is now the tenants’ home, and they have a right to live their life (mostly) as they want.

    Anyway, yes, in this case the tenant didn’t have control of the thermostat.

    • @Potato- Yup- I’ve been trying to be very respectful of my tenants (because they don’t make much noise actually… I’m more worried about the noise they hear from downstairs!).

  11. I wish we had a basement, period. It would make a good tornado shelter.

    I suppose the ideal basement tenant would be a quiet retiree in good health, partially deaf, with reclusive but not unpleasant habits. Maybe tenants like that are already all taken. :-)

    • @101 Centavos- Hahahaha partially deaf would be good. A quiet retiree in good health, the latter part is key. I had a retiree come look at the place, he even brought his little dog. I noticed he was quite short of breath just walking to the back of our house and suddenly had visions of me discovering him deceased from a heart attack or lung problems :S! So “in good health” is key lol.

  12. I once lived in someone else’s basement and the guy turned out to be kind of fruity and pranced around the place in purple speedos all the time as well as other strange things. So the risk goes both ways. ;)

    • @Invest it Wisely- LOL HAHAH~! Awe Kevin you made my day!! Really? That is strange. How did you know he was wearing purple speedos when you lived in his basement? Was there a common area?

  13. I have never given a thought of taking pictures and posting them on my ads. I would try it out now. Also I liked the utilities pros and cons as they too should not be neglected at all. But nevertheless, at the end one has to make some compromises while giving a basement suite on rent.

    • @Lauren- Yeah, I agree. We didn’t think we would need to make compromises but we ended up having to do so. Taking pictures with your ads is probably one of the most important take away pieces from this post :) Most people just disregard the ad if there are no pictures. Pictures are worth 1000 words, as they say.

    • @Wle- Hey I love your avatar! Thanks for clarifying- I should have made sure before I rambled on..! I was going with what my crazy mom says. I suppose her word isn’t always the best, I should have known better ;)

  14. Great advice, I appreciate all the advice. I’m excited to set up our basement apartment! We plan on buying a new fridge, stove, toilet, and sink. The shower is brand new never been used. We plan on advertising all of this and using it to our advantage.

    I ABSOLUTELY agree that it should be a rental that you would want to rent. I want this place to be a place I would want to live in. If it can meet those standards, I’m certain I can find a (good) renter.

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