Attractive rental returns from laneway housing
You can benefit greatly from your laneway house. The rental return is very attractive... generally, you can get a net positive cash-flow from your laneway house. You can follow this link to view photos of some laneway houses posted on the City of Vancouver website .
Below are 2 scenarios; costs and rental rates for a 750 sq ft and a 500 sq ft laneway house:
750 sq ft laneway house:
* At *$200 per sq ft, cost of construction is $150,000
* A mortgage interest rate of 4.50%, 25 yr amortization makes for a monthly P&I mortgage payment of $830 (interest cost is $557 a month)
* A 50/50 mortgage interest rate of 2.85% and 25 yr amortization makes for a monthly P&I mortgage payment of $698 (interest cost is $354 a month)
* Monthly rental income is $1,800+
500 sq ft laneway house:
* At *$200 per sq ft, cost of construction is $100,000
* A mortgage interest rate of 4.50% and 25 yr amortization makes for a monthly P&I mortgage payment of $553 (interest cost is $371 a month)
* A 50/50 mortgage interest rate of 2.85% and 25 yr amortization makes for a monthly P&I mortgage payment of $466 (interest cost is $236 a month)
* Monthly rental income is $1,000+
Both the above examples produce a healthy net income after mortgage payment. There are other costs besides one time design and construction, increase in property tax, etc, but these are small relative to the income from rent.
*Some home builders are confident that they can build more affordable laneway houses at between $150 to $175 a sq ft.
Follow this link for details on the City of Vancouver’s laneway house regulations.
