Thinking of converting your basement into a profitable legal basement apartment? Making some extra income from an unused space such as a basement seems like a no brainer, but before you hand over the keys to a new tenant, there's a lot to be considered and researched in advance. Just remember: the more leg work you do now, the better.

Safeguard yourself, your home and your potential tenant with these tips to help you prepare to welcome a renter to your basement apartment.

Is the basement apartment unit up to code and legal?
Before you welcome your tenant(s) to their new basement abode, make sure your home meets all safety and standards regulations. Check with your city's municipal standards department and any landlord-tenant legislation your province has enacted to ensure you are eligible to both provide and manage a legal basement apartment in your home.

For a second suite/basement apartment to qualify as a legal and authorized unit it must meet certain criteria including:

  • Residential zoning requirements
  • Property standards
  • Occupancy standards
  • Heath and safety requirements
  • Fire and electrical codes
Select city bylaw resources: Avoid renting an illegal basement apartment
Failure to comply with your city's bylaws pertaining to basement apartments or second suites can result in costly fines if it is determined your unit is an illegal basement apartment. Each city has its own bylaws, so if yours isn't listed you'll want to visit your city government's website. Provincial resources on the rights and responsibilities of landlords and tenants
Each province has its own laws around a landlord-tenant relationship. Know your rights and responsibilities. Notify your home insurance company when renting a basement apartment
Any major modifications to your home such as a new addition, renovation or change in occupancy are important details your home insurance company must be aware of--failure to notify your home insurer of major changes to the property can result in the insurance company refusing to pay out on a claim such as a flood or fire, and even lead to a loss of insurance coverage.

When your occupancy increases, there's a good chance your home insurance premium will as well. Check with your insurance representative to determine how adding a basement apartment may affect your property insurance coverage. Don't forget to also compare home insurance quotes from other home insurance providers; your current provider may not offer you the best home insurance rate with a basement tenant-another provider may offer better rates for homes with a rental suite.

Renting a basement apartment: Make tenant's insurance mandatory
When you are renting out part of your home (such as a basement apartment) it is almost certain that your insurance risk will increase, resulting in possible changes to your home insurance coverage. To be safe, keep your home insurance company in the loop and informed. But remember, your homeowner's policy alone will not cover a basement apartment nor will it protect the renter and his or her contents. Make sure your renter purchases tenant insurance.

TIP: An easy way to do this is to include the requirement for tenant's insurance directly into the lease.

Ready to rent your basement apartment
Your new basement apartment has been authorized, your insurance company has been notified and now, all you need is a tenant! But remember, not just anyone will do. You'll want to find the right tenant, and being careful and diligent now can end up saving you a lot of time, frustration and money later.
  • Rental applications -Require all prospective renters to complete a rental application.


  • Background checks - Tenant screening is a great way to learn more about your prospective tenant. Criminal record checks, credit bureau inquiries and employment verification are all tools that landlords use to know who they're renting to; important if the tenant will be living under the same roof. The tenant will have to give you permission (in writing for your own protection) to perform some of these checks.


  • References - Ask for references and their current contact information, specifically ask for references from past landlords.


  • Don't be shy, ask questions - According to the Canada Mortgage and Housing Corporation, you're allowed to ask questions like:
    • What is your income?
    • Where do you work?
    • How many people will be living with you? What are there names?
    • Do you have pets?
    • Do you smoke?
Ensuring the space itself is livable, that your tenant passes your standards, and by keeping your insurance provider in the loop on the status of the newly rented basement apartment, the supplementary income from renting a space can be a fruitful financial endeavour. Done right, basement apartments are a great way to generate some extra income and help pay down your mortgage.

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