What Are Garden Suites and How Can They Help You Make the Most of an Investment Property in 2023?
Affordable housing is hard to come by these days, and countless investors and developers are constantly looking for ways to maximize the housing supply and provide sustainable options at a reasonable price.
One of the methods that have been rising in popularity are garden suites. This California-style solution to today’s housing crisis provides a unique twist on multi-family housing.
So, what exactly is a garden suite and how can it help you make the most of your investment property? Let’s take a look.
But first, if you would like to learn how to properly finance the construction of one of these suites to avoid lender penalties, budget constraints and more, click the link below to book a free strategy call with our team at LendCity today.
What Are Garden Suites?
Essentially, a garden suite is a secondary dwelling unit built in the backyard or garden of an existing residential property. Often built in the back of single-family houses, these properties are popular amongst families who want to live separately, but maintain their proximity to each other, and investors who are looking to maximize the potential of a single property by adding an extra unit.
These units are typically smaller, rarely standing more than one storey tall. However, some do reach two storeys when permitted under local guidelines. As well, these suites are considered part of the initial property and typically cannot be sold separately from the main home. Despite this, they are considered a separate unit and thus can be leased to a secondary tenant on top of the tenants occupying the main house.
The Advantages of Garden Suites for Real Estate Investors
Garden suites come with a variety of excellent advantages that make them an appealing choice for modern real estate investors. Here are some of the primary advantages.
Multiple Income Streams
One of the main advantages of these suites is the fact that it allows you to generate multiple streams of income from a single property. After all, once the unit is completed, your property would then be a multi-family property.
This is incredibly beneficial because usually you would want the main unit to cover the properties expenses such as the mortgage and property insurance long before you would begin building this second suite, meaning that aside from the slight increase in expenses created by this new unit, the rent you will be collecting can become purely profit. This allows you to generate a healthy cash flow.
An Affordable Way to Expand Your Portfolio
Garden suites are an affordable way to add additional units to your portfolio with minimal hassle. Instead of taking on hundreds of thousands of dollars in mortgage debt and buying a new investment property, you can spend a fraction of the money to build a one of these suite.
Many of these suites can be built for a fraction of the cost of buying a new property – typically costing no more than $250 per square foot to develop.
More Appealing Than Traditional Apartments
For many renters, these suites are becoming a more attractive option than traditional apartments for a variety of reasons. First, these suites are their own stand-alone structure. This provides a similar feeling to renting a house as opposed to an apartment. These units also usually come with yard access – something that the majority of tenants living in apartments often lack.
Building Additional Suites on Your Principal Residence
Another thing that makes garden suites appealing is the fact they can be used to add an additional dwelling unit onto your principal residence. This can be used for a variety of purposes that can help you save money or generate additional cash flow.
For example, one of these suite provides you with the option to rent the unit to a tenant and earn cash flow from your primary resident. As well, if you would prefer not to have a tenant on your property at all times, you offer the suite as a short-term rental on sites like Airbnb or VRBO. You may also use a one of these suite to house family members such as parents or children seeking to move out and gain their independence.
Discover How To Develop Real Estate With This Step By Step Guide
Where Can You Build Garden Suites?
Unfortunately, the places where you can build one of these suites in Canada are currently limited under the law. However, laws have been changing in favour of these units being built in order to combat the current housing supply shortage.
Garden Suites in Toronto
Recently, a new ruling from the city of Toronto has made it legal for Toronto residents to construct garden suites on their properties. This comes following pushback from a group of Toronto residents associations known as ‘Building Better Neighbourhoods,’ who argued to the Ontario Land Tribunal that the city permitting these suites overreached provincial guidelines. However, their appeal was dismissed, thus making way for this new form of housing in the city.
In order to build garden suites in Toronto, there are a few guidelines that must be followed.
These requirements are as follows:
- Minimum distance from the house is 5m for a single storey and 7.5m for a two storey Garden Suite.
- Single storey suites may be no taller than 4m while two storey suites may not be taller than 6m.
- The minimum rear lot line setback is 1.5m.
- The city will not allow injury or removal of mature trees in order to build these garden suites.
- They cannot be severed and sold as a separate property. The Garden suite title is part of the original house
These guidelines are in place to ensure that developers do not use these suites as a method to artificially segment plot of land. As well these regulations are in place to ensure the integrity of the neighbourhood is not harmed by these new units by protecting local plant life and limiting the size of the property to avoid impacting the street view of neighbourhoods.
Refinancing to Build Additional Suites
One of the best options to secure the funding needed to build a garden suite is refinancing. By taking out the hard-earned equity on your properties and converting it into cash, you can free up the funds necessary to build garden suites on your properties.
If you would like to learn more about refinancing to build garden suites, give us a call at LendCity. We can be reached at 519-960-0370 or you can visit us online at LendCity.ca Alternatively, you can click the link below to book your free strategy call today.