Something that is becoming more popular among homeowners is renting out a section of your home to tenants. Put simply, this makes sense in order to create another income to offset a portion of your monthly mortgage payment. In doing so, it makes homeownership much more affordable, especially for younger adults.
However, if you’re thinking about renting out your spare bedroom or a portion of your home, there is more to consider than just the supplemental income! Continue reading to discover some of the pros and cons of renting out part of your Ontario home.
In the context of considering the pros and cons of renting a room in your house in Ontario, the question “do I need a solicitor for a remortgage” becomes a relevant financial aspect to explore. Remortgaging your home can serve as a strategic move to access additional funds or potentially secure more favorable mortgage terms, providing financial flexibility as you navigate the landlord experience. On the positive side, the funds generated from remortgaging could be invested in home improvements or address any expenses associated with renting out a room. However, it’s essential to weigh this option carefully, taking into consideration the associated costs and implications on your overall financial stability. Seeking professional advice, including consulting with a solicitor, to understand the potential impact of remortgaging in the context of renting a room can contribute to informed decision-making.
Pros
Renting out part of your home in Ontario could be a good option depending on your lifestyle and needs.
– Another source of income
- Yes, this is the most obvious (and probably most significant) benefit to renting out part of your home. By doing so, the gain is extra cash flow into your bank account on a monthly basis.
- This money can be used in whichever way you please, but it’s most commonly put towards mortgage payments, property taxes, and other bills. This can feel great as a homeowner knowing that your personal income isn’t getting completely drained into your home payments.
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– Increase your home value
- In order to make your home accessible for tenants, you may need to renovate parts of it. For example, you may choose to finish your basement or renovate a bathroom, and these are instances that will increase your home’s resale value. For the most part, the more money you put into making your home a better space to live in, the more the value goes up!
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– Space is being used
- For many people, the initial reason they choose to rent out part of their home is that they notice there is a significant part of their home that isn’t even being used! What better way to optimize your space than to use all of the space you are paying for?
– Peace of mind
- If you have the right tenants, the extra people in your home might give you some peace of mind! Particularly for those who live alone, especially in higher-risk cities like Toronto, it can be comforting to know that someone else in your house can help if any potential dangers arise.
- Again, as long as you have trustworthy tenants, you can also be more at ease when you leave your house for long stretches of time. If you were to leave your home for days or weeks at a time, it is always comforting to know that there is someone to keep an eye on your property, because it’s in their best interest as well!
Cons
Although there are many benefits to renting out your home, there are always downsides to carefully consider before following through with such a big decision.
– A significant investment
- It’s important to look at this decision as a significant investment above all else. And this money and time investment. You may need renovations and repairs to get your home in top shape. But the investment doesn’t stop there! It is your responsibility to be on-call for all of your tenant’s needs. You are now a landlord and may want to view this opportunity as owning two homes: your section of the home and your tenant’s section.
– Effect on resale
- Chances are, you are not going to live in this home forever. Though it may seem unimportant to consider your home’s resale value, it should be factored into your decision to renovate and rent part of your space.
- By turning your home into two (or maybe more) apartments, you may lose potential buyers in the future who wish to use the entire space. However, there is also a market for people that are specifically looking to buy your type of home, and you could be looking at a niche market.
- Consider where in Ontario you are buying and where a partial rental property might be sought after in the future. For example, larger cities like Toronto and Ottawa may have a larger market for this type of setup!
– Relying on others
- One thing to consider when renting your home is the amount that you are relying on your tenants. Not everyone who rents your home may be reliable, and it can be difficult when unreliable people don’t follow the rules or contract you’ve set in place. For example, if you rely on a tenant’s rent to make your own monthly payments, and they aren’t able to pay you on time, you could find yourself in a sticky situation.
Things to remember
– Know the laws
- Make sure you have an in-depth look at the provincial and municipal laws regarding rentals in your area and follow these rules adequately. Always ensure that you draft and contract to be signed by your tenants that outline and acknowledge these laws and put any other regulations you require into this contract. For example, look into rules surrounding tenants and guests that they may have in their portion of the home, which you can find on Surex.
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– Don’t rely solely on your tenants
- As mentioned before, strangers can be unreliable. Do not depend solely on their monthly rent money as your primary source of income. Make sure to have some extra money in a backup fund in case your tenants are unable to pay rent or you require funds for unexpected repairs.
– Research your tenants
- Before renting out your home to just anyone, make sure to do a bit of research on your potential renters! For example, it’s not uncommon to ask for character references or even to take a look at the life they live through their social media pages.
– Check-in
- Make it known to your tenants that you want to be routinely checking the space, as well as meeting with them to make sure they are pleased with their experience. You want to make sure that your property is staying in good condition, but it’s also important that your tenants are feeling good about the accommodations as well.
