Four unit building - keep at 4 or fix up unused 5th?

Question

Hi. I have my first rental property under contract. There are 4 rented units. There is a 5th unused unit in the basement, and it looks as if it hasn't been used in a long, long time. Should I fix up the 5th unit and rent it out? It seems like that would be against zoning and screw up my financing, insurance, etc since it would make this property commercial rather than residential. Maybe it would be better to combine one of the units with the basement unit, to increase from 1 bedroom to 3 and keep the overall number of units at 4? Opinions?

Roy N. · Answer

Lora P.

This first a zoning question:  If your zoning allows for 5-units, then you have the option to re-vigourate the lost unit in the basement.   If not, then you need to decide whether you will contravene the zoning bylaw or allocate the space to a different purpose.

After the regulatory question in satisfied, what you do with the basement space becomes a math question ... what will yield the highest return to your business ... do you split the basement and apportion it amongst the existing ground floor units?  Do you keep part of the basement to provided storage for each unit? Do you retain part of the basement for common laundry (if each unit does not already have laundry)?  Do you retain part for your own use (materials storage, workshop, etc.