Suite Your Single Family House The Right Way

Transcription

1 Suite Your Single Family House The Right Way Presented by Jared Hope BC REIN Workshop October Ave, Edmonton, AB, T5M 4C

2 Notes

3 Suiite Your Y r Single F Fam mily H Hous se Th he Right Way y O OriginallypresentedinparrtbyJamesKn nullrealestaate w null.com James@JamesK Knull.com SSuitedhouse esinthecityyofedmonto ontypicallydonothaveepermits.inotherwords,therearealotof illegal base ementsuitessoutthere.thetruthisyouwon tggotojailifyo ouhaveasu uitewithouta p permit.note evenclose!let schange ethelanguagetoconforrmingsuitessandnon co onformingsu uitesto m moreaccuratelyreflecth howthecityyviewsthese epropertiess. nexplanation nofthemosstcommonrrequirementtsofaconfo orming Inthispresentation,therewillbean ssuite.ifyouo ownanon cconformingssuite,howm mightyoubeediscoveredbycityofficcialsandmo ore importantly,whatwillhaappenifyou udo?finally,,therewillbbeadiscussiionofthemosteffectiveeways ttoremedyth hesituationshoulditocccur Ave,Edmonton,ABTT5M4C www.llrcan nada.com

4 Zoning Requirements Most common zoning permitted RF1, RF2, RF3, RF4, Semi detached not permitted: townhouse, side by side duplex Important: If you purchase a semi detached property with a suite you are assuming a calculated risk. Reference: Bylaw /Thundersto nesearchservice/ /pdfhi.txt?query=bylaw+12800&pr= page&rorder=750&rprox=250& &rdfreq=0&rwfreq=0&rlead =750&rdepth=0& &sufs=1&order= =r&cq=&id=4d9b01f039 Fire Safety Requirements: Common Problems Bedroom window size: opening of 3.8 square feet with noo measurement of less than 15 inches 5/8 inch or fire rated drywall on walls and ceilings in basement. Furnace room, laundry room, common areas, storage rooms, underneath staircase. Remember: the lower suite needs to be a self contained fire proof unit. Inter connecteoff. smoke detectors with power source hardd wired into house. If one goes off, they all go Basement ceiling height of 77 inches Suites are separated and have separate means of entry and exit. No shared entrance. Reference /for_residents/emergency_services/fire prevention secondary suit.aspx Key Contact: Dave Gagne, Fire Prevention Officer, , Building Code: Common Problems Electrical Inspection always required. Common issues: reverse polarity, improper grounds, separate breakers for kitchen electrical, sufficient electrical outletss Sufficient parking: 2 spots for upper, 1 per 2 sleeping units in suite. Dimension of 2.6m x 5.5m. Inside of garage can be used towards parking spots. Hand rail guidelines: no horizontal members except for top rail, vertical members must be 10 cm apart, height minimum of 100 cm. Stair risers need to be of consistent height Overall condition of foundation: a cracked foundation may result in a call for an engineering report Appearance of mold issues may require health inspectionn New suite development requires 2 furnaces; pre existing suites may have 1 furnace Important: Keep an eye out for thesee deficiencies when shopping for a basement suited house Key Contact: Bernie Reichert: Safety Codes Officer, , bernie.reichert@edmonton.ca Ave, Edmonton, AB T5M 4C

5 What happens when a Non Conforming Suite is discovered? How do they find out? 1. Owner volunteers for inspection 2. Neighbor complaint 3. Tenant complaint Step 1: Planning and Developme nt / Land Use inspection 1. The inspectors willl first stop by the suite and attempt to gain access from the tenant 2. The inspectors willl then schedule an appointment with you in writing Important: When they arrive they are looking for: separate renting/leads and a cooking facility (aka 220v wiring, stove, fridge) Step 2: Report for required upgrades 1. The owner will be mailed a detailed report of all needed upgrades 2. Owner has 1 year to obtain permits and begin work Important: Choose a contractor who knows how to complete these items to code Step 3: Choose action to take A: Decommission Suite 1. Issue a letter stating this will be a single family dwelling 2. Decommission 220v and cooking facility 3. Only have 1 tenant Important: If a suite is decommissioned, then to build a suite in the future will require 2 furnaces. B: Upgrade suite and obtain permits 1. 1 year to obtain permits and begin work 2. 1 year to complete 3. This will be at the discretion of the inspectors Important: Work with the inspectors to show them constant progress. C: Noncompliance to city orders 1. Orders to comply with date and time 2. Charges a. Fine up to 15k b. 1k/day fine from compliance date c. Prison time up to 6 months d. Order to complete work e. At discretion of judge f. Contempt of court Important: It s not a good idea to ignore City orders to comply Ave, Edmonton, AB T5M 4C

6 Suited House Diligence Checklist Location within neighborhood: Bus Stop LRT Grocery Park Majorr Road Employment Zoning Upper Su Curb Appeal Securee Feel First impression upon suite entry Overall condition of suite Expected rent: Garage rent: Lower Su ite: (Rate 1 = poor, 2 = fair, 3 = good, 4 = excellent) ite: (Rate 1 = poor, 2 = fair, 3 = good, 4 = excellent) Curb Appeal Securee Feel First impression upon suite entry Overall condition of suite Expected rent: Features Present: (Check for yes) Bedroom Windows 15 each dimension, 3.8sf Suite fully dry walled for fire separation Common and mechanical areas dry walled for separation Inter connected hard wired smoke detectors Basement ceiling height 77 inches Separate means of entry for each suite Sufficient parking spots 2.6m x 5.5m Hand rails 10 cm distance between vertical members, 100 cm high Consistent height of stair risers Foundation in good shape Suitable cooking facility Absence of mold/water damage Renovation required for obtaining permits: Ave, Edmonton, AB T5M 4C

7 Property located in North East Edmonton Oct-12 Property Budget/ROI assesment Purchase Standard Bungalow Addition of Basement Suite Edmonton Purchase Price/Appraised Value 275, Renovation cost/from LOC) 40, Down 55, NEW...Appraised value 350, Mortgage Amount 220, Starting Mortgage -220, Closing Costs 1, New 262, Renovations (Make move in ready) 1, Cash Back From Refi $42, Reserve 2, Cash after LOC for reserve $2, Total Cash to Purchase $60, Rent Rent Bsmt Suite Garage Garage Total Monthly Rent $1, Total Monthly Rent $2, % 5 year /30 year am New mtg 1, Insurance Utilities (average) Taxes Insurance Property Mgmt 12% Taxes Vacancy 2.0 month rent Property Mgmt Fee % Vacancy allowance 1.5/mo Reserve Total Projected Monthly BUDGET $1, $2, Total Monthly Projected Cash Flow Annual cash flow -$1, $4, year mortgage buy down 23, , year cash flow -8, , year % 27, , ROI 5 Year 71.14% % Annualized 14.23% 27.96% % year NO Appreciation 25.74% 81.81% Annual 5.15% 16.36% Landlord Resource Centre Ltd Ave Edmonton AB, T5M 4C9 Jared Hope

8 October 2012 Purchase Plus Mortgage: 1. Buyer puts an offer on the house 2. Buyer submits forms to the bank requesting a mortgage plus improvement 3. Buyer works with contractor for pricing and drawings for the renovated basement suite 4. Contractor s estimate is submitted to the bank 5. Bank appraises the house with 2 values. a. Current value b. Future value with basement suite 6. Contractor meets appraiser on site at the property 7. At closing the bank funds the full amount (80% LTV) of the future value to the lawyer in trust 8. The bank will instruct the lawyer to hold in trust the cost of the renovations 9. The mortgage payments will be for the FULL amount as the bank pushes all money to the lawyer. 10. Once the renovation is complete the bank will do a partial appraisal (at the cost of the buyer) 11. The appraiser will confirm the work has been completed to the specs quoted and originally agreed 12. Once confirmation is done the bank will instruct the lawyer to release funds 13. Funds are released to the buyer In this program there is also an option for the buyer to do up to 3 draws. This is beneficial if the buyer has to pay for the renovations out of his/her own pocket. For every draw taken an appraisal will need to be done. Each appraisal will have a charge to it which is to be paid for by the buyer. Banks will NOT absorb this cost. October 2012 Current 5 years mortgage rate is 3.14% 30 year amortization is available for any mortgage that is NOT CMHC. Banks will lend up to 80% LTV even on a refinance Ave, Edmonton, AB, T5M 4C