We know that mortgage payment of yours is a tiresome burden that eats into your income. However, we also know there are a few clever ways you can use residential real estate in Toronto to help pay down that mortgage. Here we look at three ways you can use your home to earn additional income, and one you should avoid.
1. Use Home Equity to Create a Loft or Basement Apartment
Although the idea of becoming a landlord might not sound so great, a basement apartment can help pay upwards of 35% of your mortgage. You can either shop for a home with an existing apartment or use your home equity to invest in the renovations. For example, if you have a $900K mortgage at 2.5% interest, your payments are about $4,500 over a 25-year amortization. The average one-bedroom apartment in Toronto right now is about $2000. Even if you only get $1500 because it is a basement, you still are covering about 35% of your mortgage. As well, today, people buying a home who don’t need the basement space are very excited about the prospect of having that existing tenant contribute to their mortgage. So, you can see great returns on your investment when selling your home in Toronto. There is also a growing trend towards multi-generational households. So, a family buying a house in Toronto with in-laws would be thrilled to find a ready-made second living space, so they don’t have to be rubbing elbows in the same kitchen.
If you have a sizable attic, you can consider the possibility of creating an adorable studio apartment in your attic. Attic or loft apartments are very popular because they have that unique grotto feel. Studios rent for an average of about $1,250 bringing your share of the mortgage down to $3,250 or $15,000 a year in income. The only downside is it becomes more complicated to provide a private entrance, and you also contend with footsteps overhead.
2. You Live In the Renovated Apartment
If it is just you (or even two of you), you could make even more money by renting the main floors of your home and living in your basement or loft instead. This is a great way to really leverage having a tenant as your tenants carry the balance of the payments. So, if we look at the same scenario in #1, depending on how many bedrooms and bathrooms you have, your location, etc. you could charge as much as $3,500 or more for a 3 bedroom, 3 bath home in a good area. That covers more than 75% of your mortgage. The downside is you sacrifice your living space and backyard.
3. Location Set Rentals
Although BC has stolen some of our thunder when it comes to movie production locations, Toronto still has a very respectable amount of filming going on. That mean shoot locations are in demand. You can register on the Locations library and offer your home for all kinds of productions including commercials, television series, and web series. It can be fun to see how set designers transform your home, while taking in some cash. Although this isn’t for everyone, you can negotiate some pretty sweet accommodations while your home is being used. Commercials often just need your set for a day, while featuring your home as a major location for a production can go on for months. However, you can turn down offers that don’t suit your lifestyle. The production team provides a detailed shooting schedule to help you decide. Your belongings and home are well cared for, and proof of insurance ensures any damage is covered. You of course will store your irreplaceable items which is also covered by the production costs. Depending on the budget you can earn upwards of $500 to $1,000 per day.
The One to Avoid
Since parking on the street is a major drag for Torontonians, many carless homeowners rent out their parking spots. They create a short-term or long-term rental agreement and charge upwards of $140 per month in the heart of Toronto’s garageless city. However, as tempting as this sounds, it’s actually illegal. Although the likelihood of being caught is low, fines can be as high as $25,000. It just takes one suspicious neighbour to turn you in!
While these rental options aren’t for everyone, they can help reduce your mortgage payments, while improving home value. If you’re looking for a team of Toronto realtors to help build equity fast, the Christine Cowern Team’s got you covered. Give us a call at 416.291.7372 or email us at firstname.lastname@example.org. We’d love to work with you!