5 Tips for Creating an Income Suite

Looking for another way to generate income? Consider installing an income suite (basement, apartment, upstairs flat) in your home. The rent can help you pay off your mortgage and provide a cushion if you ever lose your job. Scott McGillivray, real-estate entrepreneur and host of Income Property, now in its 2nd season on HGTV, provides some tips to keep in mind when creating an income suite.

1. Consider the Options

“I’m always looking for a natural division in the home,” McGillivray says. It could be the basement, but it might also be a foyer that divides a home’s main floor and the upstairs. Some retirees are converting the top storey of their house. Or you might have a garage that can be converted.

2. Determine the Necessities

Check the laws on incomes suites (including permits and zoning) with your municipality. You’ll also need to install a fire-and-sound barrier between you and your tenants and to create separate entrances.

3. Decide on the Amenities

Invest in quality functional items, such as toilets and tubs. But avoid spending on high design (e.g. fancy drapes), as you won’t get your money back.

4. Create a Selling Feature

Give tenants at least one really nice feature that will “sell” the apartment. This could be a great kitchen with stain-less steel appliances or a fantastic closet space. It will make the suite easier to rent.

5. Limit How Much You Spend

McGillivray suggest spending no more than two years’ of rent on an income suite. So if you’re planning to charge $1,000 a month, make sure the renovation costs less than $24,000.    

This article was originally in the November 2009 issue of Reader’s Digest. Subscribe today and never miss an issue!