Deciding on whether or not a legal basement suite is right for your Edmonton property can be challenging. There are many factors, the biggest of all being the budget. In the following blog, we dive deep into a cost-benefit analysis for the average Edmonton home, highlighting potential additional costs and opportunities.
What is a Cost-Benefit Analysis?
Simply put, a cost-benefit analysis weighs the estimated costs against the projected benefits to determine whether or not a decision is right. In this case, a cost-benefit analysis will allow you to see the potential benefits and opportunities of creating a legal basement suite in Edmonton in 2024.
Estimated Costs
Projected renovation cost: $100,000 total
Other costs:
- Permits
- Furnishing
- High-end finishes
As an example, let’s say you have a basement of 1,000 square feet. Using our handy renovation budget calculator, we can calculate that renovating your basement to include a bathroom and kitchen will cost approximately $100,000 with creating separate heating for each dwelling. Cost-effective finishes like vinyl plank instead of hardwood floors, skipping heated floors, and more can reduce the total cost, but basement suites must have separate heating, entrances, and an appropriate fire rating. Ultimately, many decisions will influence the total estimated cost of creating a legal basement suite in your home. As we will see in the next section, if you are willing to move forward with the initial investment, this can be a very profitable move.
It’s important to ensure that your home is zoned to have a legal basement suite in your Edmonton neighbourhood.
Projected Benefits
Projected rental income: $132,000+
Other benefits:
- Increased property value
- Passive retirement income
The average cost of renting a basement suite in Edmonton is anywhere between $850 and $1300, according to some rental sites. To rent your basement out at $1100 a month, you could be reducing your mortgage payments by up to $13,200 a year. The average tenant stays in the same home for approximately 2 years, meaning that you can adjust rent with inflation every two years as needed. If you rent out your basement at the same rate of $1,100 for 10 years, that’s already $132,000 you’ve made, without accounting for inflation.
This is not accounting for the increase in the real estate value of your home. The return on interest for home renovations could be as high as a 70% return for basement renovations, meaning you could make back over $50,000 in your home’s value before renting it out. More and more people are looking to retire in homes with basement suites to earn a passive income after they’ve retired. With the cost of living on the rise, this is a smart investment.
Guaranteed Price + No Surprise Contract with Peak Improvements
An Edmonton home with a legal basement suite is an ideal situation in 2024. The cost of living, inflation, and personal situations make this a wise investment. But finding a trustworthy contractor in Edmonton can be hard. At Peak Improvements, we exclusively use our guaranteed price and no surprise contract to ensure your comfort and to promote trustworthiness between us and our clients. Contact us today to learn more.
