Retirement - Home Suite Home

2008/06/12 Originally published in the Vernon Morning Star.

With the Baby Boomers reaching or nearing retirement there has been a significant increase in condo construction and sales. Many people consider retirement years as the time to downsize from their house and cut back on yard work and house maintenance. The easiest and most common option is to buy a townhouse or apartment style strata property.

The most sought after features of a home for retirees are level entry with all daily activities on one level, minimal or no yard work or house maintenance, and security so they can leave for extended periods. The reason many people choose strata projects is that they typically offer these features, especially if the project is targeted to the age 55+ buyers.

Strata projects usually provide full landscaping and outside home maintenance, the cost of which is most often included in the monthly strata fee. (Please note: In bare land strata developments, the maintenance of the exterior of the home is the owners responsibility.)Some projects provide a gate to enhance security but even without a gate the security risk is low because of the "community" atmosphere. Most burglars are likely to stay away from a community where there are lots of people watching out for their neighbours.

Strata properties are not right for all buyers because they often have rules restricting pets, visitors, use of areas outside the individual units and other possible restrictions. For buyers comfortable conforming to the wishes of the others in the strata "community" then strata properties may be a suitable option, however, some people want more independence than strata properties can offer.

For retirees seeking the simpler way of life but not willing to give up the freedom that goes with non-strata home ownership then a home with a secondary suite could be an ideal solution.

For example, picture a newer level entry rancher with a walkout basement that's been converted into a secondary suite. The owner could live on the main floor with all of the daily living activities on the one floor and they can find a tenant for the basement suite. An arrangement could be made with the tenant so that the tenant is responsible for snow removal and yard maintenance in return for a lower than average rental rate. The best properties would have low maintenance exterior and landscaping features.

Not every homeowner is crazy about the idea of being a landlord because tenants can be a problem. With the historically low vacancy rates in the Okanagan (both now and likely well into the future) it's possible for landlords to be very selective when choosing their tenants. If the suite is nice, if the location is in a good neighbourhood and the rent is fair it is very possible to get friendly, responsible tenants. The other big factor with this strategy is that irresponsible tenants will be less likely to apply because the owner will be living upstairs and in a position to observe their behaviour.

The final positive aspect to this strategy is the rental income that will be generated from the suite will supplement the owner's retirement income - and the returns can be quite substantial. Take for example a net rental income of $800 a month (very likely for a nice suite). At today's GIC interest rates of 4% it would require an investment of $240,000 to generate an equal income.

It is not a risk free investment, however since most secondary suites are not legal suites, and as such they are always at risk of being shut down by the municipal authorities. There are systems in place with the City of Vernon where one can apply to have a suite made legal or licensed. Building code and zoning restrictions do apply so best to keep that in mind.

Just like strata properties this option is not right for all homeowners and there are many factors to consider before becoming a landlord of a secondary suite. However it is an alternative worth considering for people wanting to simplify their lifestyle.

This article was co-written by Steve Campbell of the Jane Field & Louisa Cochrane.

Jane Field works with RE/MAX Vernon. Jane has over 30 years experience in the Real Estate business. To suggest topics for future articles or to ask Jane questions, email her or call 503-3755.

RE/MAX Vernon | 250.503.3755 | Toll free 1.888.503.3755 | 5603 - 27 ST | Vernon | BC | V1T 8Z5 | Canada

Investment and Retirement

Retirement - Home Suite Home