Monday, 16 January 2023
A seperate space on your own property
What if there was a way you could own an investment property and earn some extra cash flow without actually purchasing a separate property? There is! They are called Accessory Dwelling Units, otherwise known as a “granny flat” or “in-law apartment”. ADUs are small units, either attached to your home or as a freestanding unit on your property. They are generally 600-1000 square feet and have 1-2 bedrooms, kitchen, bathroom and living room. They are great options for families who wish to have a member, such as an elderly parent, live close by. ADUs are also more affordable options for family members who are not yet in the position to own their own home.
Here are some benefits to an Accessory Dwelling Unit:
1. Although the cost of an ADU can range anywhere from a few thousand dollars to much more, they have the potential to add to your home’s overall value as they are considered an addition to the home with extra bedrooms and living space.
2. It’s the perfect way to make some extra income without finding funds to purchase another property. By owning a home, you own an asset meaning, nearly everyone's home has increased in value, so you can pull from your equity to do a proper apartment. The rent will help to pay those funds back, or just keep it as income.
3. You would also be helping out the rental market. Rentals are becoming very hard to find in some areas.
4. ADUs have reduced expenses compared to your typical income property. They are considered part of the main home since they are on the same property, therefore they can not be bought or sold like a condo. There is no cost for land, infrastructure or parking.
You might be thinking it sounds cool but, who would want to live in a small space like that? Lots of people. College students, onsite 
caregivers, seniors. Someone who wants their own space but wants to keep things affordable and be close to family or friends. They are not just for living. They are a good space for someone who works from home and needs a quiet place to work. Or for athletes or a hobbyist allowing them to pursue their passions away from the main home.
If you are considering an ADU there are a couple things to consider. For ANY income property I ALWAYS advise my clients of these 2 things:
1. To consult their accountant before taking this venture as due to the fact that they will now be generating an income from this apartment they're making, they will likely be subject to capital gains tax, and possibly HST when they sell. Go and have a frank discussion with your accountant and get more details.
2. Get familiar with your rights as a landlord and the rights of a tenant. Read the Residential Tenancies Act well. Talk to other landlords for advice. Screen people properly.
Different municipalities have their own specific regulations regarding ADUs. If you are interested in learning more, please let me know and I will help you get started in that process.
