A basement apartment can help a lot with the mortgage. It can also cause problems if you buy one without checking a few things first. Here's what I go through with buyers before they count on that rent.
Is it allowed, and was it built with a permit?
Vaughan now allows up to two additional residential units on a lot with municipal water and sewer: both inside the house, or one inside and one in a separate building like a coach house. That doesn't mean every basement apartment you see was done properly.
Ask the seller for the building permit and final inspection. A unit built after July 1994 has to meet the Ontario Building Code, and the city also requires an extra parking space for each additional unit in most areas. Without a permit, you could be buying a renovation you'll have to redo, or a unit you can't legally rent.
Two areas to watch: Vaughan doesn't allow secondary suites in the Woodbridge Special Policy Area or in a floodplain. If the home is in either, the apartment isn't legal no matter how nice it looks.
Fire separation and exits
The parts that cost the most to fix are the ones you can't see in photos: fire separation between the units, proper exits, smoke and carbon monoxide alarms, and ceiling heights. A good home inspector will flag obvious issues, but they can't confirm what's behind the drywall. That's where the permit file matters.
If there's a tenant now
When you buy a home with a tenant, you take over their lease. Their rent, their deposit and their rights come with the house. If you want the unit empty for yourself or a family member, that has to be arranged properly with the seller before closing. Don't assume the tenant will leave because the house sold.
Ask for a copy of the lease, the current rent, whether the last month's rent deposit is held, and whether rent has been paid on time. Then check whether the rent is realistic for the area, because you'll usually have to keep it.
Will a lender count the rent?
Some lenders will count part of the rental income when you qualify, especially for a legal unit with a lease in place. Others won't count it at all. Talk to your mortgage broker before you make an offer that only works if the rent is included.
Insurance
Tell your insurance company about the second unit. A rental suite they don't know about can be a reason to deny a claim.
Looking at a home with a basement apartment in Vaughan? Send it to me and I'll tell you what to ask the seller before you make an offer.
More on Vaughan neighbourhoods: Vellore Village · Woodbridge · Maple · Kleinburg · Patterson · Vaughan schools guide
