Wednesday, November 23, 2011

Basement apartments

I have been doing a lot of research on basement apartments.  They are confusing spaces for sure.  It is difficult to understand the amount of work that goes into building an apartment in the basement of a house.  My focus has been on houses with direct entries to the basement, so without having to dig and modify the foundation walls.

I have found that these are far pricier than I originally thought.  My first rough estimates had the basement apartment at $30,000, but recent quotes have put a fully permitted and built basement apartment around $50,000.  This is a big number, but this apartment should easily generate $1200 per month, meaning a return of your investment in three and a half years. 

Assuming a quality job with timeless decor, this should give a lifespan to the apartment of 10 plus years.  This would result in a gross return of over $93,000 in the lifespan (after costs of building the suite).  The other advantage is when the property needs to be updated, you will avoid major costs like wiring, plumbing, sewers, construction, etc.  The costs will merely be new kitchen, bathroom and flooring.

I think these are highly viable investment options to maximize returns in real estate.  In places like Vancouver, these type of suites are now becoming very common in most homes.  This is a great way for young first time buyers to get in the market, in a good neighbourhood. 

Drop me a quick line to learn what to look for an how to move this forward.

4 comments:

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