NuVista Homes - Blog

Is a Secondary Suite a Good Idea?

Posted on Nov 27, 2018 by Earl Raatz

Is a Secondary Suite a Good Idea? Featured ImageIf you’re thinking of adding a secondary suite to your new home build, make sure you weigh your options and consider the pros and cons. Your contractor can suggest ways to modify building plans to incorporate a rental unit that will comply with residential building codes and regulations. Make sure to get an estimate of additional costs for building materials, plumbing and electrical fixtures, and interior design before you decide to build.

Increasingly, Calgary renters are looking for safe, affordable apartments, townhomes, and single family dwellings in crime-and drug-free neighbourhoods near public transportation, shopping, schools, restaurants, and public transit. Potential renters could include retirees on a fixed income, travelling salespeople, singles seeking secure affordable housing, independent senior adults looking to downsize, and more. Your new build basement apartment or room addition just might fit the bill.

Is a Secondary Suite a Good Idea? Key ImagePROS

Having a rental income can have numerous benefits, including:

Reducing Your Mortgage Payments With Rental Income

A major advantage to building a secondary suite is offsetting your monthly mortgage. Homeowners may afford to buy a larger or more expensive house in a more upscale neighbourhood with the realization that a tenant will share the costs. 

Increase Your Property Value

Potential buyers may love the idea of a secondary suite for housing an older parent or tenant. When it’s time for resale, the extra square footage of a rental unit can put you ahead of the competition.

Build Passive Income Without Breaking The Bank! 

Maintaining a basement apartment or addition to your new home build is relatively sweat-free. Another advantage to developing your basement at the time of construction is major repairs are covered under your Alberta New Home Warranty Program and insurance.

Become a Landlord Without Buying Extra Property

A secondary suite right under your roof provides additional income without the additional investment of buying a second property. Meet the building code requirements and health regulations, and agree to a tenant/landlord covenant and you’re ready to start making money. 

Reduce Property Tax and Take Advantage of Deductions 

Landlords qualify for certain tax deductions, including the cost of maintenance, utilities, and city services. Check with your accountant to explore different ways to reduce your tax burden with a secondary suite. 


On the other hand, a secondary suite may not be right for you. You might have to:

Rent for Less Than You'd Like

Depending on the size of your rental unit, it might not bring in as much income as other larger apartments or homes with more square footage. Unless you plan on renting out an entire floor of your new build, potential income from a smaller unit might not meet your expectations. 

Put up with More Noise

Sharing your home with a tenant can be overtaxing. Because you share walls, you also share noise, cooking odours, and sometimes conversation. Be sure you're willing to tolerate things that go bump in the day and night.

Stretch your Budget

Constructing a secondary suite as part of a new build might be more affordable than you think, in comparison to renovating an existing space or adding a room. That being said, it is still an additional cost you'll need to budget for. Get a contractor’s estimate and be prepared for overruns or unexpected expenses that can come with renovating an older house. The city might also require a zoning change and of course, your secondary suite must meet building codes.

Pay More in Property Insurance

Before you build, ask your insurance agent if your rates will increase with changes to property value. Additionally, having a tenant in the home may require additional liability coverage. The last thing you want is for a tenant or their guests to slip and fall on your property without sufficient coverage.

Is a Secondary Suite a Good Idea? Couple ImageThings to Consider

The decision to construct a secondary suite along with your new build can be a tough one. If you do decide to go ahead and add a secondary suite to your home, be sure to check the following list of precautions:

  • Have an emergency fund. Extra people living in your home inevitably means extra wear and tear, and as a landlord, you'll be responsible for the upkeep of your rental suite. You never know when something will break, so make sure you have enough of a reserve fund to quickly repair or replace anything that might need it.
  • Know the law. Consult a contractor to see if new building plans can be modified, talk with an insurance agent to assess whether an increase to protect your property against liability is necessary, and visit local planning and zoning authorities to comply with landlord/tenant covenants and building codes. 
  • Don't be afraid to speak to a professional. If you're unsure about any local or provincial laws regarding tenancy, consider speaking to a real estate lawyer. It may cost you some money, but it could be worth it to avoid any potential legal issues further down the road.
  • Consider the type of mortgage you have. If you have a fixed-rate mortgage on your home, make sure that you'll still be able to cover the mortgage payments if your extra rental income happens to stop abruptly (for instance, if a tenant moves out unexpectedly). If you have a more flexible mortgage, check to see how much wiggle-room you might have. It might also be worth checking the payment terms of your mortgage, to see if there are any restrictions on paying it off earlier than agreed. 

All things considered, the potential to make additional, passive income or reduce your mortgage with little to no effort might far outweigh the initial expense or occasional inconvenience. Becoming a landlord is still one of the best ways to break into the real estate market with the least amount of risk and monetary investment.

* Originally posted June 6, 2017, updated November 27, 2018 

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Photo credits: for rentcouplekey

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