Category Archives: basement apartments

Mike Holmes: How to control mould in your home, whether it’s visible or not

If mould in your home covers an area more than 10 sq. ft., or if there’s sewage involved, bring in a professional remediation company. Any surface with over 10 sq. ft. of mould should  be cleaned by licensed professionals.

Mould can present a serious health issue and it can also eat away at building materials, insulation and support structures. Unfortunately, homes and the materials inside them can provide the right food source and the right conditions for mould to grow. It’s important to know what to do if you detect mould in your home.

Mould needs an organic food source to grow, such as drywall, wood, paper, carpet, grout, wallpaper and fabrics — the kinds of materials you find in most homes. It also needs moisture and warmer temperatures.

Areas in the home where mould tends to grow include the basement, bathrooms, walls, ceiling corners, the attic, crawl spaces and on windowsills. If you live somewhere humid, the garage can also be place for mould to thrive. When you do your seasonal maintenance, make sure to check these areas for mould.

There are thousands of different types of mould. It can be green, black, yellow, white, even pink and, depending on the conditions, a single type of mould spore can be any number of colours.

It’s extremely difficult for homeowners to detect what type of mould is growing in their home and whether or not that type of mould poses a danger to their health.

A lot of people are sensitive to mould spores; they may trigger allergy and asthma symptoms when inhaled. Typically, the mould found in homes is not toxic, but it can still present a health risk. There’s no real standard for a mould level that is ‘OK’ or ‘safe’ — every individual reacts differently to mould.

According to a Mayo Clinic study conducted in 1999, 93 per cent of chronic sinusitis cases were attributed to mould. Children, the elderly and people with weakened immune systems may be more sensitive to the effects of mould exposure. If anyone in your home is experiencing headaches, sinus problems, sore throats or other respiratory symptoms, speak to your doctor. The cause could be mould.

If the mould in your home covers an area
more than 10 square feet, or if there’s sewage involved,
bring in a professional remediation company.

In most cases, you can tell if your house has mould by its musty smell and black stains. Other signs include water damage and black mould around baseboards, walls and ceilings. If there is a musty smell in your home but you can’t see any stains, mould could be behind your walls. In that case, I recommend having a certified professional home inspection done that includes thermal imaging, and possibly an indoor air quality assessment that includes mould testing.

If you find a small amount of mould that covers an area 10 square feet or less, you can typically remove it yourself. Use a solution of strong soap or detergent and water. I use a product that is non-toxic, anti-microbial, requires no scrubbing and kills mould at the root, not just the surface. Whatever you use, remember to wear the proper protective gear, such as goggles or safety eyewear, a mask and gloves, and keep the area well ventilated. And do not use bleach! Not only is bleach toxic, but the mould will come back anyway.

If the mould in your home covers an area more than 10 square feet, or if there’s sewage involved, bring in a professional remediation company.

If you bring in a professional, do your homework and ask the right questions. What are their credentials? What training have they gone through? What kind of professional accreditation do they have? Do they have references? Mould remediation is a fairly new industry, and like anything new, it’s the frontier. To make sure the job will be done right, find someone with Institute of Inspection Cleaning and Restoration Certification (IICRC).

The best way to get rid of mould is to control the moisture in the house and remove the mould. It could be something you can remove yourself, or you might have to bring in a professional. If you’re not sure, hire a professional, because when it comes to your health, it’s not worth the risk.

Source:  Mike Holmes, Special to National Post | May 28, 2016 | Watch Mike Holmes in his series, Holmes Makes It Right, on HGTV. For more information, visit

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Mike Holmes: How to turn your basement into a (proper) rental apartment

It takes a lot of work and a lot of planning — more than most people think — to properly turn a basement into an apartment that can be rented out. Sometimes it’s like opening a can of worms. Just to plan it out right and to get the appropriate permits takes about three months.

The first step should be to figure out if it can even be done, because if it can’t, you don’t want to waste your money or your time.

Go to your municipality (you can call, go in person or go online) and check the rules and regulations on turning a basement into a rental unit. Every municipality is different; some allow it, some don’t, and each one might have a different set of requirements for how they want it to be done properly.

Once you know it can be done, your next step is to go to an architect, engineer or, if you live in Ontario, a qualified person with a BCIN (Building Code Inspection Number) to create the plans/drawings for the project.

And yes, you will need plans! Without plans, you can’t get permits, and if you don’t have permits you’re asking for trouble.

If you don’t have a permit when construction starts, not only can you be ordered to stop the project, you might also have to uncover or remove any finished work to expose what’s been done so it can be inspected. Plus, getting a permit means the city will send an inspector to make sure the work is being done properly. Without a permit, it’s a crapshoot.

The professional you hire to create the drawings or plans should work with you to include the design elements you want, but more important, they’ll also make sure the plans are to code.

There are certain requirements for a basement apartment. Means of egress (i.e. exit) is a biggie. There must be a safe and unobstructed exit, so anyone in the basement apartment can safely exit, especially in case of an emergency, like a fire.

If your basement doesn’t have a safe exit, the project can get very expensive very quickly. You will have to hire an engineer to make the proper plans for a separate exit, and engineers aren’t cheap. But if you’re not touching the building structure, you don’t necessarily need an engineer.

The first step should be to figure out if it can even be done,
because if it can’t, you don’t want to waste your money or your time.

Fireproofing or fire separation is another big thing to consider.

For example, on one project I worked on, the city wanted a resilient channel on the ceiling, which is basically a metal channel that drops the ceiling down about an inch or an inch and a half, plus two layers of 5/8-inch drywall on the ceiling.

The city might also request fire-rated windows (or windows with fire-rated glass), which might not be available in different areas. That means looking at different options, such as glass block instead of a window, so you still get natural light but it’s also fire-rated.

There’s also a limit to how much glass or how many windows you can have, depending on how close your home is to the property line, again to reduce the chance of a fire spreading to adjacent properties. This can be an issue if local code requires that you add windows to the basement apartment.

Some municipalities might also want sound separation, so sound doesn’t travel from the basement up.

Then there are the mechanics: electricity, plumbing and HVAC. That might mean rewiring the basement and changing the electrical panel, or maybe breaking through the concrete floor to run sewer lines to a new toilet and shower. In one case, after we did this we realized the weeping tiles were tied into the sewer lines, which prevented us installing a backwater valve (or backflow preventer), so we had to install a sump pump, which meant more money.

That’s why it’s important to do your homework. Invest in getting the proper drawings, be involved, ask plenty of questions, and go to the city — because it could turn out to be a massive project that could take years to recover financially — and maybe mentally, too!

I always recommend homeowners get involved in any home renovation. You don’t want to hand everything off to a contractor and assume they will take care of everything for you — and do it right. It’s your house and your money; no one will care about it as much as you.

Source: National Post. Watch Mike in his new series, Holmes Makes It Right, on HGTV. For more information, visit

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How to make money investing in real estate

There are several ways to invest in real estate including secondary properties, real estate income trusts and alternatives such as real estate limited partnerships.

Don Campbell thinks everyone should consider real estate. Of course, you’d expect him to think that given his firm has advised clients on real estate purchases of more than $4 billion. The senior analyst at the Real Estate Investment Network in Vancouver, says every investor should be pondering where they can fit real estate into their overall strategy given the volatilities and uncertainties of the equities market.

“A portion of your portfolio should be in housing or hard assets,” he says. “Our clients lean towards owning their own homes and direct real estate. Our philosophy is that a good piece of real estate is like a blue chip stock. It won’t make you rich overnight, but it will perform well.”

Many investors already own their own homes or are paying off mortgages, so they have a sizeable portion of their overall net worth tied to a hard asset. But there are several other ways to invest in real estate including secondary properties, real estate income trusts and alternatives such as real estate limited partnerships. The key thing to remember is that no one asset type should take up more than 50% of an investor’s portfolio, but how you get to that level can be dramatically different from person to person.

Home ownership and secondary properties

At a time when condo sales in Toronto were reported to have fallen 18% year-over-year, many raised the question of whether residential property, be it a primary residence, second home or vacation place, is actually an investment. Some, like David Kaufman, CEO of Toronto-based Westcourt Capital Corp., simply don’t see homes as investment options. “A lot of people treat their primary residence as an investment, but they aren’t in a traditional way,” Kaufman says. “One of the things people forget is that if you live in an appreciating area, unless you are willing to exit the market and move to some other area, it is hard to make money on it.”

Kaufman adds many think they’ll always make money off their properties because of the leverage involved and the long-term growth of real estate prices in recent years. “They think real estate will always go up in value ahead of inflation, but that assumption must be fallacious at some point,” he says. “The music has to stop when there’s no real estate affordable for people to live in.”

But Campbell thinks you can make smart real estate investments by looking at trends in the area you are buying into. He says buyers must look at more than current real estate values and investigate other issues such as job growth in the region, GDP growth and economic development to determine whether those factors will positively impact prices. “If you are going to buy, buy where job growth and GDP growth is,” he says. “Don’t buy cheap, but where long-term demand is good.”

As for vacation properties, Wayman Crosby, CEO of Nicola Crosby Real Estate Asset Management Ltd. in Vancouver, says although prices have dramatically risen in the past decade, expenses have also increased and need to be considered. “Costs associated with vacation properties are often greater than a primary home,” he says, adding that funding the costs associated with these properties are done in after-tax dollars. “My belief is that the market for recreational properties may have peaked and, given the costs, no longer represents the kind of investment opportunity of the past.”

Some pundits claim personal real estate isn’t a very liquid investment, and is limiting for those who may need access to capital. Campbell disagrees. “If you need to sell a piece of property, you can,“ he says. “But if you want to squeeze the last nickel out of it, it might appear illiquid. Canadians have this incredible emotional attachment to property. But once you get by that and recognize you can pay someone 7% for looking after the place and that there aren’t that many issues that come up anyway, then you can put it in your portfolio like your other investments.“

The REIT Conundrum

Real estate income trusts have long been considered a safe way for the average investor to gain exposure to the property market. Experts, however, see REITs as investment vehicles that are linked to the volatility of the overall stock market. Yes, REITs offer liquidity, but they come with a series of potential pitfalls, Kaufman says. His company is concerned REITs can be readily affected by equity market trends as well as by interest rates. For example, many Canadian REITs were hit hard by rising interest rates in May, with several showing declines of more than 5% in the months that have followed. Kaufman isn’t sure the damage is complete.

“We have fears that we will witness that the publicly traded REIT market could face volatility that vastly exceeds the volatility of the stock market because it has three elements affecting value,” he says. “There’s the net asset value, there’s the stock market and the effect of rising interest rates that operate independently of the stock market. You could have a double whammy.”

Crosby agrees REITs are linked to market sentiments, and at some points in recent history represented a discount to the underlying real estate values. However, many REITs more recently have traded above the value of the underlying property as investors chased distributions.

Campbell says you have to do your research if you chose to invest in REITs: Find out where and what they are buying. What is the strategy? Are they speculating on higher-risk turnarounds or relatively safe investments such as apartments and commercial properties? “Why would I dramatically increase my risk for the small chance of a greater return? You need to understand where they are putting your money,” he says.

The RELP Opportunity

Investment advisors looking to open up real estate possibilities for clients are increasingly pondering the option of real estate limited partnerships, which are essentially privately-held versions of REITs. Some provinces have rules that make it easier to invest in these real estate options, but in Ontario you have to be an “accredited investor” with assets exceeding $1 million or a household income of more than $350,000 to invest in RELPs.

Kaufman likes the RELP opportunity because it isn’t tied to the public markets, thereby limiting the volatility that commonly plagues REITs, while still typically offering a total return in the 10% range. “The reason some pooh-pooh them is because they say these REITs aren’t publicly traded,” he says. “I say I don’t care. If I’m able to redeem at the net asset value rather than some price set by some day trader in his pajamas from his basement, then that’s what I care about. I’ll give up 29 days of liquidity for the lack of ridiculous volatility.”

Liquidity is an issue, says David MacNicol, president and portfolio manager at Toronto-based MacNicol & Associates Asset Management Inc. MacNicol started offering real estate investments to his clients five years ago, and now many come seeking them specifically. He says RELPs have less liquidity — his clients can typically get out after two years without penalties — but adds these investments aren’t for people looking to make a quick buck. Instead, they are aimed at those looking for longer-term returns. “We have more and more people looking for direct investment into real estate — 10% per year with 2-3% volatility,” he says, noting the volatility of the public markets can be four times higher.

Some investors are scared of RELPs because they feel private investment is where frauds are more likely to occur. But Kaufman says many put too much faith in a prospectus, a document that doesn’t offer any real protection against fraud. And Campbell says the notion of malfeasance in the RELP market is overdone, and certainly no worse than what has happened in the publicly-traded sector. “The checklist for RELPs is easy,” Campbell says. “Where are they buying and who is doing the buying? What’s their track record? Are they quality investors?”

He recommends digging deep into the history of those running the RELP before plunking down any cash. He also says to look for companies with management experience in the real estate market and past successes. “I’m not a fan of putting money into the first time someone does an LP,” he says. “Just because they have a high profile doesn’t make them great investors. I see people write $150,000 cheques because they like the investor. I’d rather people checked out the investor and their track record.”

MacNicol says one of the good things about owning alternative real estate investments is that they have limited the peaks and valleys that the public markets have experienced in recent years. The TSX in 2011 was down about 11%, while his company’s real estate fund was up 3.5%.

“That’s what our investors are looking for,” he says. “They don’t want to be up 20% one year and down the next. In the old days, a balanced portfolio got you through the highs and lows of the equities market. That won’t cut it any more. To try to achieve a 3-4% cash flow return like you might be able to in a bond portfolio, we can do that in a half-weighting position in our real estate portfolio.”

In the end, Campbell says the fundamentals work for all forms of real estate investments, regardless of whether they are a personal acquisition of a vacation home, a stake in a publicly-traded REIT or looking at the RELP market.

“No matter what you are analyzing, go back to the basics: where and who is involved, and is there a good solid future?” he says. “I’ve done this for 21 years and these things have never changed. I’m looking for a place with a future and not a past.”

Source; Financial Post Rob Thompson, Special to Financial Post | September 6, 2013 

To find out more about investing in real estate, attend our next real estate information session on October 22nd, 2015. Click here for more info.

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Mike Holmes: Why winter is a prime season for house fires, and how to prevent them

Fire Prevention Week runs from Oct. 4 to 10 and is a good reminder to have working smoke alarms on every level of your home, including inside bedrooms and outside sleeping areas, and to test them monthly.

It’s that time of year again — no, I’m not talking about fall or Thanksgiving, I’m talking about Fire Prevention Week, which runs Oct. 4 to 10.

Every year, Fire Prevention Week falls on the week in which Oct. 9 lands, to commemorate the Great Chicago Fire of 1871, which, unfortunately, took the lives of more than 250 people and left another 100,000 homeless. It’s a reminder to all of us that a house fire can happen to anyone, so we must take the proper steps to prevent it, and then keep our families safe in case it does.

Proper homebuilding has a lot to do with fire prevention.

For example, firewalls help stop flames from spreading between semi-detached and townhouses; there can only be a certain amount of glass on either side of a house, depending on how close it is to the property line. Again, this is to help stop the spread of flames.

There’s also fire-resistant insulation (which I recommend installing on all your exterior walls) and fire-resistant intumescent paint that can be applied to sheathing and framing. It may not stop a fire from starting, but it will give you more time to escape and it will minimize damage to your home.

But as a homeowner, you have to keep on top of things, too.

The No. 1 priority: Have working smoke alarms on every level of your home, inside bedrooms and outside sleeping areas. (About a quarter of all house fires start in the bedroom.) And test them! You should test your smoke alarms every month — no exceptions — and change the batteries twice a year. I do it when the clocks change; that’s easy to remember.

I’ve heard of some people who actually remove the batteries from their smoke alarms, or disconnect them — this is a big, big no-no. In one case, a few days after a family disabled their alarms (because they kept going off) a fire broke out in the home and the couple lost their three-year-old son.

Smoke alarms save lives. It’s that simple. In fact, they can cut the risk of dying in a house fire by about half — that’s huge!

But when was the last time you had a licensed electrical contractor come and take a look at your home’s wiring?

Electrical fires are more common than you think. And now with winter approaching, we’ll be using our heating systems and lighting more.

You have to make sure your home’s electrical system can safely handle the extra load, because it’s way too easy for bad wiring to cause an electrical fire. In fact, most home fires are caused by poorly maintained electrical and heating/cooling systems. So get them checked by the right pros!

Have your home’s electrical system checked at least every four years, and if you bought a house that’s 15 years old or older, bring in a licensed electrical contractor as soon as possible, especially if the basement is finished. Too many homeowners think they can do their own electrical, and unfortunately, many of them have done. How do you know if everything is up to code? If there’s knob-and-tube wiring? Or aluminum wiring mixed with copper? Or if the person who did the work knew what they were doing?

Have a licensed electrical contractor do an audit of the entire house. They’ll make sure all the electrical work is up to code and that all the connections are tight.

Fire prevention is not something you can put off, or that you can get around to doing when you have the time. Because the truth is, we don’t know when a fire can start in a home, and then it’s too late.

Keep safe, make it right and please, folks, make sure all your smoke alarms are working … today!

Source: National Post Mike Holmes, Special to National Post | October 3, 2015 | Last Updated: Oct 3 10:37 AM ETWatch Mike in his new series, Home Free, on HGTV. For more information, visit

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Buying a home with a basement apartment

In the market to buy your first home? Perhaps you’re moving up? Or maybe you’re looking for an investment property? If you’re buying a property right now chances are you’ve come across more than a few homes that advertise income potential.

Truth be told: Any home with a secondary suite represents a valuable source of rental income. Not only do these homes command a premium on their sale price, but mortgage lenders tend to appraise the value of these properties higher, as do potential buyers. But how do you know if the home you’re buying has a legal apartment? And what about all those home-owners who rent out their basement? Are they all just breaking the law?

Difference between a second suite and a legal apartment

As early as the 1950s, some municipalities (led by the City of Toronto) started allowing home-owners to construct second suites in their semi-detached and detached homes. (You can also add a secondary suite to a row house, but there are a few more restrictions and regulations that govern authorized suites in this type of house.)

These second suites are subject to bylaws and building codes but the standard is lower than rules regulating legal apartments.

For example, a legal apartment must be it’s own completely contained box—separated from all other rental units using special fire-rated drywall, doors and floor assemblies that provide a 20 to 30 minute burn-time. (So it would take a fire 20 to 30 minutes to penetrate the material and spread to the next unit.) A legal apartment must also have special fire-dampers (gates installed in duct-work to ensure that fire can’t travel from one unit to the next through duct work), as well as two points of unobstructed escape.

Secondary suites, on the other hand, do not need to be constructed using this special fire-rated material. Instead, they must be self-contained (a separate bathroom, kitchen and living space), must have a ceiling clearance of at least 6-feet-5-inches (although this can differ depending on your municipal codes), and have at least two forms of unobstructed escape, one of which must be a door leading directly to the outside.

To be authorized, second suites must adhere to residential zoning requirements, property bylaws, occupancy standards, health & safety requirements as well as fire and electrical codes. Unlike legal apartments, only a 15-minute fire rating is required with secondary suites. Also, these suites cannot be bigger than the main living space—so, you can’t turn a 1,200-square-foot basement into an apartment if your main floor space is only 1,000 square feet.

Creating a new second suite

If you bought a home and you’re considering adding a second suite to your home to help pay for your mortgage, you’ll need to meet your city’s bylaws and regulations.

In Toronto, for instance:

→ The principal residence must be at least 5 years old
→ The house must be detached or semi-detached (there are some additional rules and exceptions for rowhouses)
→ You cannot significantly alter the exterior facade of the house
→ The second suite must be smaller than the rest of the house and be self-contained with it’s own kitchen, bathroom and entrance
→ The property must meet parking requirements (except in the former city of Toronto, where they recognize that limited parking is available)
→ Bathrooms must have either a window or a fan
→ There must be at least 4 cubic feet of kitchen cupboards per occupant

If you cannot adhere to all these rules, you can apply to the city’s Building Department Committee of Adjustments, but this will take time, money and will probably require you to do more work to bring the unit up to code. Keep in mind, though, that the consequences of renting out an improperly built unit can be devastating, and a penalty for fire code violations is a fine of up to $25,000 or a prison term of up to one year, or both.

Creating a legal apartment

If you opt to build a legal apartment you will need to adhere to all the previously mentioned regulations, but be prepared for a stricter set of standards. For instance, instead of simply requiring the landlord to ensure smoke alarms are installed and have good, working batteries, landlords of legal suites may be required to install interconnected smoke alarms as well as fire extinguishers.

Buying a house with a second suite

If you’re in the market for an income-generating property, you’ll quickly come across the term “retrofit,” often attached to the phrase: “Seller and agent do not warrant retrofit of basement apartment.” But what does this mean? And should you run for the hills?

According to Bob Aaron, Toronto Star’s real estate lawyer columnist, the word retrofit is “toxic” and all it really states is that the apartment does not meet fire code. Aaron suggests that when this word is used in a listing, a home buyer should “find out why the unit doesn’t comply and what would be necessary to legalize it.”

Paying to retrofit a secondary suite would be the simplest way to legalize the apartment. But it can also be expensive. Perhaps that’s why about 80% of all secondary suites in Toronto (and approximately the same in Vancouver) don’t comply to all fire code regulations—making them illegal apartments, but authorized secondary suites.

So where does that leave the would-be buyer? It means you need to be aware of the rewards and the risks that come with owning a home and renting out a secondary suite. The rewards are straightforward, so I’ll concentrate on the risks:

→ Anyone can request an inspection of your secondary suite from the city planning department or the fire department.

→ Getting caught with an illegal apartment could result in you having to transform the home back into a single family dwelling (ie: remove the tenant and the secondary unit) or pay to retrofit the apartment so it’s legal

→ If a floor or fire prompts an accident or death you are liable and can be sued. (It’s one reason why Aaron suggests hiring professionals to make sure your unit meets electrical and fire safety standards, at the very least)

→ If you don’t tell your insurance provider about your tenant, you could void your home insurance and risk losing a claim if a catastrophic accident or event occurs.

For a detailed explanation of what to expect and how to legally construct a secondary suite or legal apartment, read the Homeowners’ Guide to Secondary Suites.

Source: Money Sense by August 31st, 2015

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Canadians spending more on fixing homes than buying new ones as renovations top $68 billion

"While (renovation pending is now) below the long run average of 3.6 per cent, it is impressive stacked up against overall economic growth of 1.6 per cent record for the same period," said Altus, in its report.

Maybe it’s the influence of all those home renovation shows or perhaps it’s the cost of moving, but Canadians are increasingly spending more money to update their houses than to purchase new ones.

A new survey shows renovation spending reached $68 billion in 2014, $20 billion more than was spent on new homes last year.

Some of it is the so-called “HGTV effect,” according to Altus Group, but Peter Norman, chief economist with the real estate research company, said it’s also because the housing stock in Canada just keeps getting older.

“There are a number of homes out there that are more 50 years old and they require a lot of work all the time,” he said, adding that low interest rates have probably helped the renovation sector more than the new home sector. “Every person who renews their mortgage from five years ago renews it at a lower rate. To a lot of people that frees up cash they’ll put back into their house.”

Altus expects the spending on renovations to continue to grow by three per cent annually in 2015 and 2016, which would leave renovation outperforming the general economy.

Renovation spending is now such an important part of the overall Canadian economy that it accounted for 3.4 per cent of gross domestic product in 2014.

Most of the spending, three out of every four dollars, is going toward alterations or improvements. The rest of the spending is primarily going towards repairs.

Gregory Klump, chief economist for the Canadian Real Estate Association, said strong real estate sales ultimately lead to renovation spending. The average amount of money spent on renovations following a real estate sale was $9,535 in 2013.

“Often it can make a lot of economic sense to renovate instead of moving,” Klump said.


From the 2000s up to the recession, renovation spending grew by 8.7 per cent annually. Post-recession it grew by 2.6 per cent annually.

Phil Soper, chief economist with Royal LePage Real Estate, said the biggest reason for the uptick in renovation spending might be the cost of homes.

“In our biggest cities in every province the homes have become more expensive and the gap between entry level and luxury homes has grown,” Soper said. “Many people look at that and say rather than stretching to buy an entire new home, maybe I can upgrade my existing property.”

Contrary to conventional wisdom, not all the spending is being done with debt. Only about 20 per cent of all dollars borrowed under home equity lines of credit are earmarked for renovations.

One concern for the government might be the percentage of home renovation conducted in cash, and therefore part of the underground economy. About 40 per cent of respondents in the Altus survey believe small renovation jobs under $5,000 are done with cash.

Another worrisome issue for consumers might be that many of these renovations are being conducted without proper insurance coverage.

TD Insurance warned Tuesday that not telling your insurance company about what you plan to do in your home could result in the denial of a claim.

“I think some homeowners believe keeping their insurance company in the dark about renovation is going to keep their premiums from rising,” said Craig Richardson, vice-president at TD Insurance. “If renovation work is done that materially alters the insured property, the original insurance may be voided. The homeowner is actually paying for coverage they no longer have.”

Some changes to your home, like increased square footage, could raise your rates. Finishing your basement may also cost you more but it’s important to understand your sewer backup limits.

But you might also get a reduction in rates if you did something like upgrading the electrical wiring in your home.

Source: Financial Post Garry Marr | July 14, 2015 5:44 PM ET

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CMHC to Allow 100% of Suite Income

The market for houses with basement apartments is about to get a little hotter. CMHC has announced that it will allow 100% of the rental income from legal secondary suites to be used when qualifying for a mortgage. Currently it allows 50%.

The nation’s largest default insurer says the move is meant to “Facilitate affordable housing choices for Canadians.”

“Secondary rental suites are recognized as a source of affordable housing offered at a cost that is often lower than those for apartments in purpose built rental buildings,” it adds. Secondary/basement suites also give lower-income Canadians the chance to live in single-family residential neighbourhoods.

The new rule takes effect September 28, 2015.

“This is definitely good news for anyone who is looking to buy a home and subsidize the cost” with a renter, says Vancouver-based broker Peter Kinch, of DLC’s Peter Kinch Mortgage Team. “…The ability to utilize 100% of the rental income to qualify for the mortgage…can certainly make the difference for many homeowners and may move a larger number of homebuyers from condo purchases to a single family home with a mortgage helper.”

Broker Marg Green, of Concierge Mortgage Group, agrees that “There will be a big demand for it”, but rightly notes that more clarity is needed on what CMHC considers a legal suite. “What is legal? Is it fire retrofitted? Is it registered with the city? If the suite isn’t legal, lenders generally won’t use the rental income (for qualification purposes).”

Here’s what we’ve gathered thus far, with respect to what’s required to use 100% of suite income with CMHC:

  • The property must be owner-occupied
  • The property being insured can have only two units (i.e., a duplex or a single home with a legal secondary suite).
  • Rental income cannot be used if the suite is “illegal/non-conforming” but “legal non-conforming” is okay. (Non-conforming means that the suite was grandfathered in before zoning/regulations restricted such units. You can check with the city to confirm if a suite is legal.)
  • The suite must be self-contained with its own entrance.
  • Property taxes and heat must be factored into the borrower’s debt ratios (which is currently not the case when using rent from legal secondary suites)
  • For existing units, there must be two-year history of rental income from the suite. The maximum rental income allowed for qualification is a two-year average of the unit’s rent.
  • For new units, a market rent appraisal can be accepted if an appropriate vacancy rate has been applied to the estimated rental income.
  • Mortgage applicants must “demonstrate a strong history of managing credit” with a minimum credit score of 680.

On 3-4 unit owner-occupied properties and 1-4 unit non-owner occupied rentals, CMHC will be allowing a net rents calculation (i.e., gross rents less operating expenses).

Note that individual lender guidelines may very well be tighter than what you see above.

Genworth and Canada Guaranty have had a 100% add-back policy for a while (for basement suites), but mainly in Victoria and Vancouver. CMHC’s new policy extends nationwide. Both private insurers say they’re reviewing CMHC’s changes and haven’t decided if they’ll match this guideline. We’ll bet that one or both of them will.

“In the big picture, I do not see that this will have a significant impact on the overall housing market,” says Kinch. “But in certain suburban areas, this shift in CMHC policy will help speed up a trend that is already taking place, and that is the widening price-gap between single-family and multi-family (condo, townhome) homes.”

Another broker, who didn’t want to be named, said the move could encourage more people to lie about owner-occupying a property (i.e., say they’re living in one unit but renting out both units). That minor unavoidable side effect aside, CMHC deserves applause for trying to boost the stock of affordable rentals and allowing young homebuyers an alternative to condo living.

Source:  July 27, 2015  Robert McLister  

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Broker calls for grow-op reform

Certain homebuyers are being unjustly punished by lenders for purchasing houses that should not be classified as grow ops, according to one industry player.

John Greenlee, a broker with The Mortgage Centre, has had trouble finding financing for houses that had been used as grow ops for marijuana, but he also tells of an instance when a house was improperly categorized one.

“(A Realtor I deal with) was trying to sell a “former Grow-op” where the previous tenant (from 12 years ago) was found to have had two or three plants growing in the bathroom. No modifications were made to the building like a traditional grow-op,” Greenlee wrote on “For all intents and purposes, other than the plant being illegal, it wasn’t anything different than someone growing a lemon tree in their living room.”

Greenlee told the house was mentioned in a police report, which was enough for it to be considered a grow-op by lenders.

The clients had trouble selling the house as a result. And he thinks there should be more clarification around what is considered a grow-op.

For his part, he has had trouble finding financing for houses classified as grow ops.

“I don’t recall higher rates but lenders have certainly gotten tougher on the underwriting,” he told “We always disclose it to a lender; some lenders, including Scotia, won’t even do them anymore.”

Currently, grow-op houses are red flagged in CMHC’s database, and they require a number of requirements before it will insure the property for lenders.

Eugene Pilato, of Century 21, wrote about the requirements for insuring former grow-ops in a blog post, including a copy of an environmental audit, a certificate ensuring the property is habitable, a minimum down payment of 20 per cent, and an insurance premium of one per cent of the amount of the mortgage.

Source: by Justin da Rosa | 22 Jun 2015

Basement renovations start with waterproofing

Lowering your basement floor requires careful underpinning of the foundation, in stages, to prevent the walls from collapsing and destroying the home.

When we first started putting basements under houses, the space was mainly used for storage, laundry and as a place to keep the furnace and hot water tank out of the way.

But as our lifestyles have changed — and property values rose — the basement became an obvious place to add more living space.

But basements are also the parts of houses that are most likely to get flooded. So the first consideration before starting any work on the basement is to make sure it’s properly waterproofed.

With many older homes, there’s virtually nothing to stop water from seeping through cracks and gaps in the foundation and cause all sorts of problems.

Ideally, you’ll want to do it from the outside, by digging a trench around the entire perimeter of the house and then installing a waterproofing membrane to the exterior side of the wall. Of course, with many city homes, there simply isn’t room between neighbouring houses to excavate. In that case, you’ll need to apply the waterproofing membrane on the inside of the walls.

Either way, the membrane will extend below the floor level and get tied into a weeping tile system that collects any water and channels it away from the foundation.

If you’re adding the waterproofing on the inside, you will need to install a sump pit where the water will collect and, once it reaches a certain level, a pump will push it outside. (Note that the building code prohibits the sump pit from being connected to the sewer lines, so you’ll need an outflow pipe to the exterior.)

In the past few years, we’ve had some torrential storms that taught many homeowners a painful lesson. When does the power tend to go out? When there’s flooding. When do you most need your sump pump? When the power’s out and it starts to flood.

I’ve recently come across a great product that helps avoid this catastrophe, the Ion Genesis. It has dual, digital water-level sensors so there’s a built-in backup. It can be combined with a battery backup to keep the system running when you need it. There’s even an alarm system that will automatically call you if there is a problem.

Most older basements have little to no headroom, so before renovating, owners often opt to excavate first. There are two basic options: underpinning and benching. With underpinning, a contractor will excavate below the existing foundation wall, in stages, and then pour a new, deeper foundation below the original.

Benching involves breaking up the floor and pouring a new foundation adjacent to the existing one. Benching is cheaper — it might cost about $40,000 to underpin a 500-square-foot basement; benching would be about $25,000. But for each foot you go down, your new foundation has to project a foot out from the existing wall. So you end up with a “bench” around the perimeter that eats into the usable floorspace.

Whichever route you take, you’ll want to use a reputable, experienced company that has all the proper licences and insurance. (Last year, a house near Avenue Rd. and Lawrence Ave. collapsed while being underpinned and a 19-year-old working on the project was killed.)

Breaking up the floor has the added advantage of allowing you to install new sewage pipes, and make other modifications, such as installing a backwater valve. This device prevents water from municipal sewer lines from getting into your home if there’s a backup. The City of Toronto has a rebate program that covers up to $1,250 of the cost of installing a backwater valve.

You might also want to consider adding radiant (hot water) heating or electric heating cables below the floor to warm the space. Or, if not for the entire floor, at least in the bathroom if you’re adding one.

The layers of gravel and insulation that will go down before the new concrete floor is poured also act as a barrier against radon, a naturally occurring radioactive element in the soil that’s found in potentially dangerous levels in some parts of the country.

Obviously, you’ll need to insulate the walls if that’s not already done. The tried-and-true method is to install batt insulation between the wall studs, then cover it with a vapour barrier and drywall. Another option is prefab panels that include framing, insulation and a finished interior wall all in one.

Finally, if your plan is to create your dream home-entertainment centre in the basement, I’d recommend you soundproof it from the rest of the house. Adding insulation in the space between the ceiling and floor above will help muffle the sound from blockbuster movies. I use Owens Corning’s specially designed QuietZone acoustic insulation for this. Finish it off by mounting soundproofing drywall (or doubled-up sheets of regular drywall) on “resilient channels,” metal strips that help reduce sound transmission, and you’ll be able to enjoy movies and music without disturbing the rest of the house.

Source: Toronto Star

Jim Caruk’s column runs every two weeks in New in Homes & Condos. He’s a master contractor, editor-in-chief of Renovation ContractorEND magazine, renovation editor for Reno & Decor ENDmagazine, and founder of the Renos for Heroes program and Build It Yourself Learning Centres in the GTA.