Should You Buy a House With a Basement?

October 3, 2019 | Posted by: Ron Chan

Should You Buy a House With a Basement

 

You’re in the market for a single detached home or townhouse and are wondering if you should seek some extra square footage down under. By the latter we mean a basement (not Australia) and by all means it’s definitely something to consider. Let’s look at a few key things that can help with your decision.

4 Things to Consider Before Getting a Mortgage on a Winnipeg Home With a Basement

Strong Foundation?

A home with a basement finds its foundation well underground and that does present some challenges for older properties. Make sure a thorough inspection is made to account for cracks or fissures that may allow cold air and/or water ingress into the property. If there is a furnace or hot water heater in the basement, have them inspected too, as the years remaining on the warrantee will give you an idea of when to expect a call for replacement or repair. The HVAC concerns for a home with a basement are significantly greater and often more complicated than they are for a single level home, so be be diligent with your questions about foundation construction, insulation, pipes, and all HVAC installations underground. This will factor into the type of mortgage you can afford.

Factor Increased Utilities Into Monthly Expenditure

This carries over from the above HVAC considerations. A home with a basement (vs a single level property) will have a much greater monthly utility expenditure, especially if occupants plan on using the space frequently for leisure and general household living. Consider how much time you and other family members will spend in the basement, and factor in the extra heating, cooling, and electricity required to create a comfortable and functional space. Again, this will help you budget around your monthly mortgage payments.

You Can Pay Down Your Mortgage By Converting the Basement Into a Rental

A house with a basement presents buyers/investors with the opportunity to earn monthly rental income, income that can be applied to paying down the mortgage. For many modern Winnipeg properties, this may require a few retrofits such as a bathroom and kitchenette addition along with a separate entrance. For others, where pipes and cement are exposed more extensive renovations may be required, but in the end with the right contractor you can put together a very attractive living space that can garner top dollar from the rental market. There may be a significant additional investment beyond your downpayment, but the ROI can be a very handsome one. Basement suites make for perfect longterm and short term rentals, especially in Winnipeg where the post-secondary student and single young professional demographic is growing fast along with the commercial and technical sector.

Do You Own a Business?

We brought this up as a key qualifier in our article about why a Winnipeg duplex may make a great investment. If you’re a consultant/contractor you can use the basement as an office and write off a much bigger percentage of the mortgage when compared to write-offs attributed to a room inside of a single level home or condominium. The same is true for entrepreneurs who make products on their own, or those who can service customers/clients from a designated space on their property. The entire basement may be considered a tax write-off which is a huge benefit that you can take to the bank. A downstairs suite also removes the need for many business owners to pay a commercial lease elsewhere.

Whether a house with a basement is right for you or otherwise, take note that the foundation of any successful mortgage is found in working with a broker. Contact Ron Chan today to gain access to preferred (and unadvertised) mortgage rates on Winnipeg homes and more. Call 204-290-9950 for a friendly noncommittal conversation.

 

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