Hi all, I'm looking for some advice. Please critique my plan. I'm particularly interested in the advice of people who have actual experience in the matter, though any advice is welcome!
Currently, my household (my partner and myself) is 100% debt free, so all our free money goes into savings. I am 35 and we own a small home (mortgage-free) that has almost doubled in value in the last 12 years from our purchase price of $118,500 in 1998 to its current approximate value of $215,000. We live in a bustling mid-sized city that is rapidly becoming a large city, hence the fast increase in property values.
My partner may end up on permanent disability in the next year or two due to a serious progressive blindness disorder, and my web marketing related job may be made redundant in the next year. That means we both expect to lose our approximately $50,000/year jobs around the same general time. I would be eligible to claim EI for several months, but I don't expect to ever find a permanent job with benefits again. It seems almost everything is contract now in the type of work I do, the skill set required changes constantly, plus I want to scale back and work part-time from here on in anyway. We don't have kids and never will have any, so our cost of living is very low. We only have one car and plan to keep it for 20 years.
I've always been interested in living off rental income. Our plan is to sell this place once our current jobs are kaput, then use that money to buy a larger and nicer place in a stable low cost of living area with a good climate and convenient transit (plane, bus, train) access. We have settled on moving to Niagara Falls. Money goes a lot farther there as far as real estate is concerned, and for the current price of our house, for the same money we'd get something far superior in a much nicer upper middle class neighbourhood.
Our new house would be required to have a finished basement apartment with a separate entrance and kitchen and shower, which we would rent out. The main part of the house would have four bedrooms, so we'd have the option of renting out one or two individual rooms, preferably to friends we already know. The basement could be rented to anyone since they would not be sharing our living space. We would require first and last month's rent up-front, and rent out in a term of one year.
We figure a rental fee of $750-$800 for the basement apartment would entirely cover our monthly carrying costs of property tax, insurance, and utilities, as well as providing a modest profit to help pay for our food costs. As for upstairs, individual rooms are generally rented out for around $350-$400 per room, so any room rentals on top of the basement apartment would be pure profit.
The Niagara Falls bylaws state any homeowner can rent up to two individual rooms in their house without having to register as a rooming house. I'm less clear about what's required when one rents a totally separate basement apartment, but would obviously check with the city to see that the basement apartment is legal before buying!
I would pick up a job, likely close to minimum wage (perhaps at the Casino?), although if my husband is trying to live off disability then I have to be careful not to make too much income or his disability payments will be clawed back. The rules are a very strong disincentive for a disabled person's spouse to work to supplement income, as is the case with people on welfare. Perhaps the rental income alone will be adequate as me working AT ALL might cause too much spousal income for someone on disability.
An American tech company owner friend of mine would potentially like me to be his part-time virtual assistant and remote financial manager, since I've already saved him so much money with my ideas, which might be a nice part-time option for me, but I'm not sure of the legalities of working for an American company while residing in Canada. Obviously I wouldn't need a US work permit since I'm not actually in the USA, but does anyone know for sure if it's legal? It seems like a grey area, but I do see ads for virtual assistants all the time on online contractor sites, so it doesn't seem uncommon. I suppose if I'm considered a contractor instead of a full-time worker then it's all fine.
What do you think of this rental income plan, and do you have any experience with pros and cons of renting space in your personal home, whether it's a separate apartment or rooms?
Do you have any knowledge about the legalities or requirements of working for a US company while located outside the US?
Do you see any glaring holes in my plan?
Thanks everyone!
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