Laneway House or Basement Suite: Which is the Better Investment?July 8, 2021
Are you looking for ways to reduce your mortgage cost while adding equity to your home in Richmond? Or maybe you have elderly relatives who need a place to age in peace, rather than move into assisted living.
Countless families are confronted with these exact situations every day, and the solution most often either requires a major renovation or a laneway house builder in Richmond to achieve. This then begs the question, when you need extra space, what is the smartest investment choice – a basement conversion or a laneway house?
Whether you currently own a home with the potential for an extension, renovation, or laneway house, or are looking for a new home with the possibility of building later, here are a few factors to consider.
Laneway House: Pros and Cons
Demand for laneway house builders has been exploding across Canada, and it all started in Vancouver. A laneway house offers homeowners some distinct advantages over basement suites, and laneway house builders in Richmond are increasingly in demand, where basements are unusual.
Pro: Increase the Value of Your Property
Laneway houses provide the potential for homeowners to offset some of their mortgage costs, which is a huge benefit in an expensive housing market like Richmond. It has been estimated that having a laneway home can increase the resale value of your home by over a hundred thousand dollars.
Pro: Higher Income Potential
A 2-bedroom laneway house in Richmond can fetch as much as $2,500 a month in rental income, nearly double the going rate for a 2-bedroom basement suite.
Pro: More Privacy
Laneway houses allow homeowners to keep family nearby or earn rental income without sharing their home. For many, this is the single most significant factor pushing homeowners towards laneway house builders in Richmond – the ability to benefit from the added space without sacrificing privacy.
Con: Loss of Outdoor Space
Laneway homes take up less room than you may think, but you will still be losing some of your outdoor space. Laneway house builders in Richmond can help you choose a floor plan and design that optimizes your laneway home while minimizing the impact on your available outdoor space.
Con: More Expensive to Build
The average laneway house costs between $200,000-$300,000 to build, compared to approximately $60,000-$90,000 for a complete basement suite conversion.
Basement Suite: Pros and Cons
Basement suites offer homeowners with limited outdoor space or smaller budgets the opportunity to benefit from the additional space without having to build a laneway home. There are several advantages to income suites, but also some drawbacks to consider.
Pro: Less Expensive
Basement suites are significantly less expensive to build, with the typical legal suite costing around $60,000 depending on the existing structure and the finishes you choose.
Pro: Saves Outdoor Space
Because basement suites use the space inside your home, you are not losing any of your outdoor space. However, you are sacrificing indoor space, which could potentially be an issue later for growing families.
Con: Less Privacy
Some homeowners are wary of sharing their space with a basement tenant. Just as it is nearly impossible to completely soundproof a condo, even with a well-built, legal suite it is difficult to insulate from all noise transfer.
Con: Less Rent Potential
The rental income for a 2-bedroom basement suite in Richmond is between $1,200-$1,500, which is about half the rental potential from a similar-sized laneway house.
When deciding between a laneway home or a basement suite, it’s important to consider your budget and weigh your current and future needs. Generally, laneway houses in Richmond provide homeowners with the privacy and income they want now, with the flexibility they may need later.
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