A Lesson in Renting your Basement to Students
If you want to rent your basement out to students, it's worth putting in the renovations to make it desirable and get a good return on your investment
Every year, many students in the Lower Mainland face a major shortage of housing. Meantime, home owners or buyers are looking at huge mortgage payments in Vancouver's pricey real estate market, and the need for "mortgage helpers" has never been higher.
It's the perfect storm that is creating a great opportunity for owners or buyers of homes with basement suites to cash in by renting them out to needy students. But with that comes risk and responsibility.
Take Laura and her husband John. When they went looking to buy a home on the North Shore, house prices were already sky-high. The idea that they could have an international student rent their basement and pay them $800 a month was very appealing.
The couple knew to be accepted in an international home stay program meant sprucing up their basement. For a few thousand dollars, they did just that.
"We've had a number of young Japanese students stay with us over the years and it's been a great experience and the rent really helped with our mortgage," says the mother of two grown children.
The only down side was the lack of privacy. Laura's advice for anyone considering renting out part of their home is to do your homework and be prepared for to do the work and deal with the hassle that comes with being a landlord.
Like many international students who flock to BC, Leonardo Franco came to learn English. The 24-year-old Brazilian relied on his international school, ILSC, to help him secure a clean, safe homestay.
In the end, he rented a basement suite in East Vancouver for roughly $850 per month.
"I paid my rent to the agency who secured my lodging," says Franco.
For his budget, that covered breakfast and dinner, use of the Internet, television and a landline for local phone calls only.
According to his homestay contract, the rules included no parties, no smoking, drugs, no overnight guests, as well as warning his host family if he was going to be later than 11 p.m. he needed to notify them.
When asked if it's been a good experience, he says: "Yes ... I had privacy, I learned another family culture. I ate different food."
Franco is among more than 300,000 post-secondary students who will be hitting the books this fall in the Lower Mainland alone.
And for home owners who could use a little mortgage helper, renting a basement suite to a student can be the solution. But if you haven't done your homework, there can be tough lessons to learn. Here are our key tips.
To rent your basement suite will require more than a fresh coat of paint. Your basement might need additional insulation, carpeting, wiring, furniture and a bathroom. Check with a home renovator before you begin to find out what your costs will be.
Where to Advertise
University or college housing notice boards at student union buildings print out flyers or register with the housing office.
Graduate student societies.
Newspaper classified ads in both dailies and community newspapers, Craigslist, Rent BC, Places 4 Students, ESLRENT.com, My Ideal Home rentals, rentseeker.com, www.kijiji.ca
What Students Are Looking For
Location:Students want to live close to their campus. In addition, they want to be within walking distance to a bus route or SkyTrain station.
Amenities:They want a suite that is bright, in good shape and offers amenities such as access to wireless internet, cable television, laundry facilities, parking and furnishings.
Hot Local Areas for Student Rentals
Any area where there is a nearby university or college.
UBC Point Grey Campus students want to be on the Broadway corridor or anywhere in Kits or Point Grey.
SFU students favour locations on or near bus routes #143 Como Lake, #144 along East Burnaby Mountain and #145 along East Hastings route.
SFU Surrey students are hoping to stick near Surrey City Centre and close to the SkyTrain.
Kwantlen Richmond students are looking near the Lansdowne SkyTrain station route and along Minoru Boulevard between Westminster Highway and Granville to Blundell Road.
North Vancouver home owners can target Capilano University students.
Do Your Research
Read up on the landlord-tenant legislation rules that apply where you live and make sure your suite is legal. In addition, make sure to research your local municipal bylaws, which include things like guidelines and standards for fire and building safety. Municipal bylaws also cover issues such as zoning and permits. The Canada Housing Mortgage and Housing Corp. has a useful website with many good links.
Risks and Solutions
Breach of insurance:If anything were to happen, for instance if a fire starts in the rental suite, the insurance company could say they were not informed of the tenant and that the policy is voided. So when you rent out a room or basement in your home, you must inform your home insurance company something that the vast majority of people fail to do.
Income tax increase:Once you have a rental suite in your home, you have to claim that rental income on your tax return. In addition, once you start using the property for revenue, a portion of the capital gain when selling the property could be deemed taxable.
A troublesome tenant:There's always the fear that a student will attract parties, drinking, drugs or simply play music loud and late. Make sure you get references from your tenant and draw up a list of rules and regulations, following landlord-renter legislation, as with any rental agreement. For extra peace of mind, do as Laura and John did and get a student through a recognized program like Canada Home Stay International, so there is an organization that you can go to if there are any problems.
Information obtained from www.rew.ca and Michelle Hopkins