We have a large, finished three-bedroom in-law suite in our basement. We don’t rent our in-law suite out but we might in the future. I could be a decent source of income in retirement.

As house prices increase faster than wages and inflation in many countries, in-law suites are more and more popular. With higher prices, more people are forced to rent and so more rental options need to be created.

On the other side of the equation, with higher housing prices, homeowners need to rent out a part of the home to help pay the mortgage. It’s a win/win in many ways.

I know in the region where we live, housing is ridiculously expensive and so many houses have suites. If they don’t, homeowners invest in adding a suite to rent for extra income.

I’m very familiar with the in-law suite and landlord business in general. I’ve rented a basement suite and carriage house. I’ve owned a four-unit building. I now own a house with a three-bedroom basement in-law suite. We have plenty of friends who have in-law suites.

What are the different types of in-law suites you can build or create at your home?

First and foremost, before you do anything, you need to look into the legalities in your jurisdiction for any type of suite you build. If permitted, there are no doubt building codes and regulations you must adhere to. If you’re building a carriage house or separate structure, you’ll need to understand whether you can do that and if so, the restrictions.

I’m saying this because it’s the prudent course but in reality, many folks don’t bother going the legal route. Again, too many local governments make it too complicated and/or are far too restrictive. They yammer on about needing more housing but it’s far too often the same government that makes it far more difficult than it needs to be.

On the other hand, this is why the government regulates suites, and that property safety measures must be followed. Escape routes, size, access, etc. Without any government regulations, you end up with horrendous living situations for some people. It’s a balancing act.

Typically, going the legal route will serve you best in the long run when selling. Being able to say it’s a legal suit can help with selling a property, especially for a buyer who wants a mortgage helper.

So here are the various types and distinctions

1. Basement suite

The most common type of in-law suite is a suite built in the basement. Some take up the entire basement while others a portion. Some are large with three bedrooms while some are tiny such as a studio. Some are walk-out while some are fully underground. Some are built when the house was built and some were added after.

In expensive areas, basement suites are more and more common to help homeowners pay for the mortgage and because housing is expensive, there’s demand for these living options.

2. Carriage house / Laneway house

To deal with housing shortages, some regions are permitting homeowners to build a carriage house on the property to rent or sell. It’s one way to add higher-density living space. It’s an option in Vancouver, BC for example.

It’s actually a good way to leverage one’s property for revenue. These structures can vary in size, but typically homeowners must get a permit. It’s hard to conceal building a separate structure… and nobody wants to be forced to tear it down because it wasn’t permitted properly.

3. Separate structure (Accessory Dwelling Unites – ADU)

You could build a separate structure akin to a large shed on your property to serve as an in-law suite. Again, permitting is necessary but it’s being done.

How is this different than a carriage house? Carriage houses typically are built with access to a laneway or road at the rear of the property but other than it’s not really much different. Carriage houses are a holdover from decades ago when estates had carriage houses for staff.

Examples of an ADU include a guest house on a property or even a pool house that includes guest quarters.

4. Above garage

Some houses build a separate suite above a garage, especially if the garage is detached from the main house but it can be built above an attached garage as well. Adding a separate entrance isn’t difficult… a staircase and a small balcony with a door will do the trick.

Again, this type of in-law suite addition is easily discovered so you definitely need to get the proper permits. These are typically fairly small unless it’s a large three or four-car garage. I suppose you could allocate more space from the main house to the suite if it’s an attached garage.

5. Converted garage

Another option is to convert the garage to an in-law suite. Many garages these days don’t house vehicles but instead serve as storage or sit empty. If you get your storage situation under control, you could easily convert the garage into a suite.

6. Empty bedrooms

Perhaps your kids are grown and you have empty bedrooms but you may have parents residing with you… you could combine two bedrooms into a small separate suite for your parents. It would probably never attain legal status to rent to non-family members, but you could convert the bedroom to create a comfortable suite for a family member.

7. Main floor suite

Some in-law suites are built on the main floor as part of the house but with a separate entrance. It’s not terribly common but there are places where basements aren’t possible which means if a homeowner wants a mortgage helper, it requires allocating space on the main floor.

This would be pretty difficult to add to an existing house as it would require some layout adjustments but new houses sometimes are built with a suite built on the main floor.

The purpose of your in-law suite may dictate what type you build or buy

This dictates whether you build an in-law suite vs a legal suite. They can be one and the same but not necessarily.

If you plan to have your parents or a parent or older child live in your suite, that means you might prefer something that’s more integrated into your homes such as something on the main floor or garage conversion providing easy access.

If it’s for elderly parents, you may need to ensure it’s ground-level and equipped for potential disability needs. If it’s being built for a family member, you can incorporate it as part of your home. You definitely want to ensure to follow the regulations but those regulations may be relaxed for this purpose.

However, if you plan to rent it out to strangers as a legal suite (arms-length arrangement), then you will want something more separate with its own entrance. It will very likely require much more stringent permits and follow more stringent building code measures.

In-Law Suite Floor Plan Examples

More and more houses are built with suites. Here are some floor plan examples.

Cost

It costs far more to build an accessory dwelling unit (separate structure) than to convert a garage or basement into a suite. If it’s for family and cost is no concern, build what’s best. But, if you’re building this as a revenue stream and money is a concern, then you need to crunch the numbers.

You can build a decent basement suite for $100K but that’s not likely going to come close to building a separate structure that’s comparable in square footage. That said, you can buy modular housing units for a reasonable cost these days that could make for a great ADU (assuming it’s permitted).

How much does it cost to build an in-law suite?

That’s impossible to answer because it depends on the materials you use, the type of suite or unit you build, whether you do it yourself or hire a contractor, how big the unit is, and so forth.

If you do it yourself and are budget-savvy, you could build a basement suite for $20,000. If you go all-out building a laneway house on your property, you could easily spend $300,000 or more.

Permitted vs non-permitted

This really applies if you’re buying a house and want a place with a mortgage helper. Some are legal (i.e. permitted) and some aren’t. You’ll want to make the proper inquiries so you know what you’re getting.

It’s best to follow your jurisdiction’s building code/zoning for an in-law suite

I know plenty of homeowners don’t bother getting permits for their suites because it is a hassle, delays construction, and/or the permit application might be outright declined or require significant changes.

For example, some jurisdictions might forbid a two or three-bedroom suite even if there’s sufficient space. Another common restriction is the amount of square footage you can allocate to a suite.

The amount of rent increases considerably from a one to a two-bedroom suite and again from a two to a three-bedroom suite. In fact, three-bedroom suites provide housing for families which means a higher income bracket and therefore can command much higher rent just because there aren’t a lot of three-bedroom suites around.

Of course, you must charge less than a three-bedroom townhouse or condo rental which is typically preferred over a basement suite (but necessarily better than a carriage house which is a separate structure).

What is required for a legal in-law suite?

This will vary by jurisdiction but typically it requires its own entrance, proper escape windows from every room (this is very important), kitchen, bathroom, a proper bedroom with closet, and/or separate utilities.

There’s a lot more required for most zoning regulations so be sure to get a copy of your local building code for in-law suites. If you hire a contractor to build the suite, ensure they know what’s required.

What rental suite features net a higher rent?

Location dictates how much you can fetch big time. Besides that, consider the following:

Number of bedrooms

The number of bedrooms definitely dictates how much you can fetch in rent assuming the rest of the place is decent. For example, if it’s three bedrooms but is ugly and cramped, you’re better off with a one-bedroom that offers proper space and layout.

Soundproofing

I once upon a time rented a small, one-bedroom basement suite that was built under the kitchen and main living area that had hardwood flooring. It was not quiet. There definitely was not sufficient soundproofing or proper insulation between the suite and the main floor above.

It wasn’t terrible because I wasn’ there much but had I been in the place often, it would have driven me nuts. If you build a suite, invest in proper soundproofing whether above, below, or on the walls.

Access

Easy access makes for a more attractive rental option for folks. If they have to trudge through your space, that’s not great. Privacy and convenience is paramount.

Parking

Offering a parking spot may be a dealbreaker for some prospective tenants. In cities, parking is a premium so if you can provide parking, that could be a very attractive option that will fetch you higher rents.

Quality/Design/Light

It goes without saying that the nicer your suite, the more you can ask for. If it’s shoddily done with little light, it won’t appeal to as many people and so you’ll have to compete by offering a lower rate.

If, on the other hand, it’s contemporary with plenty of light and incorporates quality craftsmanship that doesn’t feel like a basement suite, you’ll be able to command higher rents.

Basement vs. separate structure

Separate structures such as a carriage house or above-garage suite will fetch more just because they’re above ground, maybe larger (not always mind you), and probably nicer.

I know I’d much rather live in a separate structure and/or above ground. We rented a carriage house a couple of years a while back and it was fantastic. It was a two-bedroom home with a totally open concept main floor upstairs. It was stunning and served us well for a few years.

Amount of privacy

If you can provide their own outdoor space, that’s a plus. Generally speaking, the more privacy you can provide, the more attractive it is to prospective tenants.

Utilities included?

I’ve lived in rental units where utilities were included and in places where they were separate. I never much cared either way but if you are in this to create a proper suite, it’s best to invest so that utilities are separate and under your tenants’ control.

Don’t forget to inform your insurer

If you build a suite and/or get renters, don’t forget to inform your insurer. It will very likely impact your house insurance policy. It’s an easy thing to forget that could have catastrophic consequences.

7 Different Types of In-Law Suites You Can Add to Your House or Property