Wednesday, February 13, 2013

Basement Apartments - great value add

Watching television and seeing shows like Income Property is a great idea.  It shows how a house can produce extra income when a secondary suite is added.  This can be a huge bonus!

For instance - a small bungalow in Ottawa can be bought for approximately $340,000 and rent for $1800 per month.  This is an annual rent to value ratio of 6.4%.  By adding a basement suite, your rent will jump to a likely $1500 on the top and $1100 on the bottom for $2600 per month.  The renovations should cost you approximately $60,000, so your new ratio is 7.8%.  Adding that basement suite is a massive change in your return. 

A basement apartment might be appealing but there are pitfalls.  As the owner, you assume any liabilities, even if the suite was built prior to you owning the property.  There is no single government authority, which provides written certification that any given basement apartment is legal. Make sure the basement apartment complies fully with all the applicable fire codes, building codes, Electrical Safety Authority regulations and zoning and housing standards by-laws. Illegal basement apartments can be a risk to the occupants and others in the structure.

 Light, Bright & White. Good for a basement

The Ontario Building Code which prescribes minimum requirements for the construction of buildings is a code that applies only when the house was built. The building code changes over the time but for the most part, it does not apply retroactively. The fire code which prescribes construction and safety issues as they relate to how the building is required to perform should it catch fire, can apply retroactively.

Here are few basic requirements for a legal basement apartment in Toronto:
(1) The detached or semi detached house must be at least 5 years old.
(2) The front of the house cannot be significantly altered to change its appearance from that of a one unit building.
(3) Basement unit must be smaller than the other units.
(4) Minimum ceiling height is 6'5". Ceiling must be continuous. Suspended (T-bar type) ceilings and exposed joists are not acceptable. Furnace room ceiling must be dry walled or plastered too.
(5) Doors must be solid wood or metal and minimum thickness is 1.75". Exterior door must be at least 32"x78". The smallest dimension of the window is 18" and the opening must be at least 600sq in. Windows must be within 3' of ground, and if there is window well it must extend 3' from the house wall to allow room to crawl out.
(6) Bathrooms have to have either a window or fan.
(7) A kitchen equipped with a refrigerator, stove in good repair and working condition. Cupboards having a capacity of not less than four cubic feet multiplied by the total number of persons occupying the unit.
(8) New apartments require building permits before construction begins. In most areas an additional parking space is required for new apartments. If there is a parking spot for the upper unit, there must also be a parking spot for the basement.
(9) The property owner is responsible to make sure that smoke alarms are installed and maintained.  Carbon Monoxide alarms are required under many Municipal By-laws. They are to be provided in each dwelling unit in a building containing a fuel fired appliance or an attached garage. Even if they are not required by legislation they make good sense with today's design methods providing for air-tight construction of dwelling units. Smoke alarms must be installed in each dwelling unit on every floor including those containing a bedroom or sleeping area. The alarm must be audible in bedrooms when the bedroom doors are closed. The smoke alarm may be battery operated or connected to an electrical circuit with no disconnect switch between the over current device and the smoke alarm.

Interconnected smoke alarms may be required if:
• 15min. Fire Resistance Rating is used between dwelling units
• one dwelling unit must exit through another dwelling unit

 Open-Concept is Best:  Whenever possible, open-concept is best in basement apartments. Anything you can do to keep a space feeling open and airy is helpful. Light colors on the walls help.

If required, interconnected smoke alarms must be installed in every storey above and below grade in each dwelling unit, and in every shared means of escape where applicable. These alarms must be audible in bedrooms when the intervening doors are closed.

(10) An electrical inspection by Electrical Safety Authority and all the deficiencies identified during the inspection must be addressed. Owners should retain the letter of compliance received from the Electrical Safety Authority for future reference purposes. This letter must be made available to the Chief Fire Official upon request.
(11) A continuous separation with a 30 min. Fire Resistance Rating is required between dwelling units and between dwelling units and other areas. This may be provided by existing membrane of lath and plaster or gypsum board. Openings in Fire Separation shall be protected with rated doors installed in hollow metal or solid wood frames and equipped with self closing devices Lesser degrees of Fire Resistance Rating may be acceptable with the provision of interconnected Smoke Alarms or Sprinkler Protection. The containment features are intended to provide protection for the occupants living in a dwelling unit from a fire occurring in another portion of the building, outside of their control.
(12) A single means of egress - provision for the escape of persons from each dwelling unit in the event of fire - may be acceptable if the following conditions are met:
• It is properly separated with a 30 min. Fire Resistance Rating
• The flame spread rating of means of escape does not exceed 150 (wood paneling is unacceptable)
• The means of escape does not involve entering another dwelling unit or other occupancy and leads directly to the outside at ground level. Two means of escape are required if one means of escape is through another dwelling unit. An existing means of egress may be acceptable if the building is sprinklered.

 basement apartment ideas | ... in the basement 5 Things to Consider before Finishing Your Basement

A detached house, semi-detached house or row house containing two existing dwelling units (each unit containing living, cooking, sleeping, and sanitary facilities) may be permitted if it was in existence on or before November 16, 1995 and meets the Ontario Fire Code requirements. Proof is required to establish the date upon which the second dwelling unit came into existence (on or before November 16, 1995):
* An affidavit, sworn before a notary public or commissioner of oath confirming the date of construction of the second unit and confirming that the unit has, either currently or in the past, been occupied as a dwelling unit.
AND, Any one of the following:
1. Past rent cheques
2. Assessment Roll information
3. Lease agreement
4. Installation date of a second hydro or gas meter
5. Utility bill for both units
6. An affidavit from past tenant(s), sworn before a notary public or commissioner of Oath confirming the occupancy date(s) – affidavit must include former tenant’s current address and phone number

Section 9.8 of the Ontario Fire Code prescribes the requirements for Retro-fit for basement apartments in the following areas:
1. Exits - egress
2. Separations between dwelling units (ceilings and walls), doors, etc.
3. Smoke alarms
4. Carbon Monoxide alarms (per By-law)
5. Hydro inspection

When exploring adding a secondary suite, the first and best step is to call 311 and talk to the city of Ottawa.  Ask for the building code department.  They can walk you through the steps.  They will require full drawings of the space, so be prepared for a bit of a process to receive your building permit.


For information on Ottawa real estate and Ottawa investment real estate please contact the Bennett Property Shop Realty Brokerage.


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