Chloe Conover – Salesperson at Berkshire Hathaway HomeServices
Real estate investment is a smart way to secure your future. The demand for rental units is always high, and owning a property with a basement apartment can give you the upper hand in the rental market. A basement apartment is a self-contained living space in the basement of a single-family home, and it has many benefits that both investors and buyers can enjoy. In this blog, we will discuss the five benefits of buying a home with a basement apartment.
1. Return on Investment
A basement apartment offers the absolute cash on cash return in real estate.
For example, a newly built one-bedroom basement apartment in Toronto rents for between $1,800-$2,500 per month.
That means, if you were to invest $50,000 in building a basement apartment and rent it for $2,000 per month you would have a cash on cash return of 48% and you would have a renter pay off your invested capital in just a few short years.
2. Ongoing Extra Rental Income
Once your initial investment or loan is paid off, a basement apartment can offer an ongoing stream of rental income. By renting your basement, you can have tenants can help you pay off your mortgage or cover other expenses. This is especially beneficial for end users who are looking to offset some of the costs of living in the property.
3. Increased Home Value
Adding a basement apartment to your home can increase its value, making it a wise investment. A basement apartment is an attractive feature that can make your property stand out in the market. When you decide to sell your property, you can expect to get a higher price for it because of the additional living space. Buyers are always looking for homes that offer more value, and a basement apartment can be the selling point that sets your property apart.
A basement apartment provides flexibility for both investors and buyers. For investors, a basement apartment can be used as a rental property or as a living space for themselves, depending on their needs. For buyers, a basement apartment can be used to accommodate a large family, an aging parent or as a home office. A basement apartment can offer versatility that is not found in other types of properties. Basement apartments are also attractive short term rental options for homeowners who don’t necessarily want someone living in their home full time.
5. Multi-Generational Living
If you have a large family or are planning to start one, a house with a basement apartment can be a great option. The extra living space can give you and your family members more privacy and independence. This can be especially beneficial if you have older family members or adult children who need their own space but still want to stay close to home.
In conclusion, a basement apartment is a smart investment for both buyers and investors. It offers incredible return on investment, ongoing rental income, increased home value, flexibility and multi generational living. If you are considering buying a home with a basement apartment or the potential to build one, make sure to work with an experienced Realtor who can help you understand the construction and legal process.