Secondary Suites in Calgary

[cschwehr]

Greetings,

I`m looking at homes in Calgary with secondary suites. I`ve noticed a lot of them are illegal suites, either due to entrance requirements, heating conflicts or zoning requirements because of frontage or lot sizing.

I`m interested in having a basic, single bedroom suite in an area like Ranchlands, Bowness, Montgomery, etc (NW) that I can reside in the upper dwelling while having a tenant in the lower part of the dwelling. I`m curious how so many are listed as "mortgage helpers" since they could get shut down at any time by the CoC if a complaint is registered.

I`m not trying to run a shady deathtrap, I`d be in a position of ensuring fire code requirements and egress requirements are met, but some of these places are down to the frontage requirements of the residence even though there is enough parking, enough rear deck space, etc.

Does anyone have input on this? Does anyone know if the CoC has ever discussed loosening the requirements in the future?

 

[RedlineBrett]

I deal with this question all the time with clients... Both with the live up / rent down variety and the traditional non-owner occupant investor. It is frustrating because it is not a black and white issue in Calgary. The city has approved - or looked the other way - in a number of specific cases which makes it very difficult to plan a business around.

Here is what we know

Yes 99% of all secondary suites in Calgary are illegal according to the current CoC building code. The ones that are legal usually won`t cashflow.

No they do not aggressively enforce the bylaw and have been known to be more lenient than the bylaw/building code suggests in certain situations.

Certain areas have been targeted for higher density and are favorable places for secondary suites. Others are not.

Do some searching on here as you will be able to learn a lot about the issue and several prominent REIN membes have added to the discussion.

Also make sure your realtor knows this market segment very well and isn`t giving you poor information if you are on the verge of buying. ("oh it`s an R2 so the suite is legal")

 

[housingrental]

Brett normally provides helpful and informed posts
Everyone`s human though

Part of REIN`s mantra is stay out of the gray area.
Stick with legal suites only.

Stability of revenue source and liability minimization are the cornerstones of building a successful portfolio.

 

[JimWhitelaw]

Adam, I`m sorry I have a bad memory. Please remind us again about your experience with the Calgary rental market, the Alberta building codes and the City of Calgary approval process for secondary suites?

Part of the problem that Brett points out is that (like in Edmonton) the City of Calgary is not consistent how their own regulations are interpreted and applied. The difference between one "legal" suite and an "illegal" one can be completely arbitrary. It`s nice to say "stick with legal suites only" but the reality is that the bureaucracy in charge of making that assessment is often ignorant, lazy or incompetent. Possibly all three. Investors need to do their own homework and use their own judgement about the risk associated with any given secondary suite.

 

[RedlineBrett]

QUOTE (housingrental @ Jun 28 2010, 03:23 PM) Brett normally provides helpful and informed posts
Everyone`s human though

Part of REIN`s mantra is stay out of the gray area.
Stick with legal suites only.

Stability of revenue source and liability minimization are the cornerstones of building a successful portfolio.

LOL kind of expected this from you Adam...

Anyways here is the thread from the last time we got into it

http://www.myreinspace.com/forums/index.ph...l=calgary+suite

to the OP, this is in the member`s only forum so you may not be able to read it.

Adam, Do you always stay below the speed limit? Running a secondary suite in Calgary is very similar - it`s not criminal it is just against an antiquated, ambiguous bylaw which is inconsistently enforced and constantly challenged at council meetings. Anyways it`s a Calgary issue and if you don`t actively work here you really don`t know all sides of the story...

 

[cschwehr]

QUOTE (RedlineBrett @ Jun 28 2010, 06:30 PM) Anyways here is the thread from the last time we got into it

http://www.myreinspace.com/forums/index.ph...l=calgary+suite

to the OP, this is in the member`s only forum so you may not be able to read it.


Thanks fellows,

Yeah, I can see it`s very grey. I`ve talked to realtors about it and researched it online, but haven`t really seen the areas they`re picking - so it`s hard to tell what is a good option. I see Adam`s point, I just also will agree with the 99% illegal suite discussion. I`ve and found that everything under $340 in the SW/NW is illegal basically.

If we got shut down, we could break even. If I have the renter - it`s gravy. We wouldn`t go negative and lose the property - so I`m not basing income on imaginary potential.

I`ve found some really hilarious ones, like the suite is private entrance, frontage is 16m, depth is 26 or something - it`s JUST shy... that and it needs to go R2 before it made the application. This hopefully will become a really serious discussion during this mayoral race - since as a renter - I know it`s a real issue for REIN members trying to provide a legitimate service and tenants requiring safe, affordable housing.

I know the area is vague, but has anyone in Calgary heard how Ranchlands accepts these kind of suites? I saw one in Bowness that could create a legal suite after coing R2 (size of lot, parking, frontage, etc.) but it would need zoning and application, which we know is $3000-skyisthelimit before it`s in. I`m looking in Bowness, Ranchlands, Beddington, Shawnessy, Montgomery, Strathcona and Glenbrook (based on what is listed currently). I`m pretty flexable with the NW/SW. I just want a reasonably safe area as I have a 18 month old son.

I`ll make this clear, I`m not trying to buy and operate something dangerous. If I have a tenant, I want to see them live in a safe place, but as was mentioned - if the cash flow is non-existant with a legal suite, why would anyone buy it? This is Alberta, STARS is a charity, rental property isn`t.

PS - No - I have no access to that thread - My father is a REIN member, but I am not currently. This investment will have his direct involvement in property financing and I will maintain, upgrade and handle the tenants for a portion of the value of the home as it grows with time and such. This would basically turn the management fee and my work into a partial downpayment later on.

 

[RedlineBrett]

QUOTE (cschwehr @ Jun 29 2010, 12:17 AM) I know the area is vague, but has anyone in Calgary heard how Ranchlands accepts these kind of suites? I saw one in Bowness that could create a legal suite after coing R2 (size of lot, parking, frontage, etc.) but it would need zoning and application, which we know is $3000-skyisthelimit before it`s in. I`m looking in Bowness, Ranchlands, Beddington, Shawnessy, Montgomery, Strathcona and Glenbrook (based on what is listed currently). I`m pretty flexable with the NW/SW. I just want a reasonably safe area as I have a 18 month old son.

We own in several of these areas and manage in all of them.... all with suites. If you`re actively shopping feel free to shoot me an email or give me a call and I can give you some insight on specific locations and some of the strategies we`ve used to mitigate risk. Some communities are certainly better than others from both a tenant profile and community `vibe` with regards to basement suites.

 

[housingrental]

Jim + Brett

I have no experience in Alberta

I don`t pretend otherwise

What I can tell you and I hope you take to heart to keep yourself + your clients safe:
The city might be unresponsive but this can change on a dime. Enforcement can next election / next hire look to brutalize owner`s and become fairly effective in shutting down + fining a good chunk of stock.
The second issue is that it creates difficulty to ensure fire, electrical, life safety compliance. So when a fire goes wrong, because you`ve not had fire dept etc. through or anything registered you might find out that X really wasn`t adequate fire separation for two units, or the window really wasn`t big enough to be considered a second egress, etc.. and be hit with jaw dropping and life changing costs.
The third issue can be insurance - will they payout?

Be safe. You do something long enough the downside will happen. Best to proactively protect your interests by ensuring conformity prior to purchase or planning immediate change to legalize.

 

[DaveRhydderch]

QUOTE (cschwehr @ Jun 29 2010, 12:17 AM) I know the area is vague, but has anyone in Calgary heard how Ranchlands accepts these kind of suites? I


I have one currently for sale in Ranchlands. The owner hasn`t had any issues with the secondary suite. http://www.realtor.ca/propertyDetails.aspx...pertyId=9246337


I`ve done a lot of work with secondary suites and do have a couple quick suggestions:

1. Make sure there`s lots of parking on the property.

2. Talk to the neighbours

3. Pick good tenants

This will help mitigate the risks.

As for this being in the "grey" area, its really not. Imagine if all 80k suites in Calgary were closed. Just go in with your eyes wide open.

 

[bizaro86]

QUOTE (DaveRhydderch @ Jun 29 2010, 01:32 PM) Imagine if all 80k suites in Calgary were closed. Just go in with your eyes wide open.

They don`t have to shut them all down for it to be an issue. Just yours! That being said, if no one complains its probably not an issue, making proactive management even more important, I would think.

Michael

 

[cschwehr]

QUOTE (bizaro86 @ Jun 29 2010, 02:10 PM) They don`t have to shut them all down for it to be an issue. Just yours! That being said, if no one complains its probably not an issue, making proactive management even more important, I would think.

Michael

Thanks everyone for their insight!

I`ll agree with you definitely on the point of proactive management. I`ll be living upstairs though, so I would be doubtful with any major problems other than parking.

Dave, the property is nice. It would meet the needs for suite requirements, but I`m trying to find three in the main suite... as my wife wants to have more children. *grin*

Adam does bring up some valid points... the issue would be that I`m a tradesperson, so running the interconnect for FA, ensuring drywall depth (actually only 1/2" for Calgary secondary suiting) and over time, separating the air handling systems would be all possible. Egress access in basement windows will always be an issue if someone doesn`t ensure it`s large enough, but it`s surprisingly reasonable to core out and install a window actually.

I will take your offer under advisement Brett. I`m spending a lot of time looking at units and don`t want to spend too much time of the local agents until I`m really prepared to sign on the line, as they say.

I`ll keep looking around and find something I`m sure.

Thanks guys!