Please advise on wisdom of building an in-law unit for income (Vancouver: apartment, rental)

[Panks]

I've been looking for a duplex or single family home with an in-law in a good part of Vancouver for months without any luck. My budget is limited to 275k but even searching outside my budget, hardly brings anything up. I know I'm not missing anything that gets on the MLS because I search multiple times a day. But its certainly possible that the best places are bought before they get on the MLS.

So I'd like your opinions on the wisdom of buying a single family and building an attached or detached accessory unit.

I know the zoning and setbacks will have to be checked out and I know the miseries of living through construction and cost and time being higher than planned. What I am completely unfamiliar with is the hell that the planning and building dept can put me through. On a chart called How ADU-friendly are Cascadia’s biggest 25 cities?..Vancouver scored a scary low 38!
The second hurdle would be whether the potential income will justify the cost of construction in Vancouver. It seems that the rents are quite low so that could be a deal breaker too.

Any and all advice is appreciated!

[StealthRabbit]

Buy one that exists (apartment above garage or in basement, or apartment in shop / barn). There are a few around, but not popular (yet).

Building a ADU will cause you grief and the city / county will always be after you for compliance (to prove occupant is a family member that needs care). It is really sad that you CAN NOT care for a friend / non-family in an ADU.

You have to prove the ADU is occupied every 24 months (by a family member) or you will have to remove it.

I have added extra living spaces in my homes / shops, but I NEVER add a permanent range. (disallowed). I have a 'canning kitchen' on wheels that 'boarders' can use periodically. (you will note I DON"T call them TENANTS!) I keep internal space in such a way it is considered 'shared' (usually laundry) and not keyed between units (takes the right person). I travel a lot, so it is nice to have someone watching the place, getting mail, mowing, feeding the dog, and watering plants. + they get the place to themselves ~ 50% of the yr. (nice view, so they love it).

Rents would not justify the grief (or the expense). Also you lose a portion of your 'Primary Residence Capital Gains Exclusion" on any rented space.

On the other hand... it is not so tough to create an adult boarding / foster home. And FAR more profitable.

[Panks]

Thank you StealthRabbit. That was great info.

So if I am understanding correctly, the only way not to lose part of your Primary Residence Capital Gains Exclusion if you get a place with an apt over the garage is by having a boarder which means they must have access to the common areas of the house? To be honest, I'd prefer to lose part of my capital gains exclusion than to lose my privacy

I've never heard of an adult boarding /foster home... is that like a halfway house or a senior residential care home? Wouldn't it require getting licensed?

[StealthRabbit]

Originally Posted by Panks

...
...the only way not to lose part of your Primary Residence Capital Gains Exclusion
...

I've never heard of an adult boarding /foster home... is that like a halfway house or a senior residential care home? Wouldn't it require getting licensed?

sorry.
I thought you were inquiring as a means to augment your income (rental of ADU).

You lose your primary Residence capital Gains on ANY portion of your residence that you rent for income.

Senior residential care home (or adult daycare) for income,
yes, it would require permitting, but at least you have a good chance of succeeding (unlike getting permit for an ADU)

[Panks]

You were totally right...I do want to augmenting my income with a rental

I just don't know if I could handle an adult daycare unless its different than what I'm picturing. I thought an independent living place has to have a nurse available 24/7, provide meals and housekeeping etc, the property & liability insurance is really high and at least in CA they make it very difficult to get a license. Are they in short supply in WA?

I knew someone who had a sober living house. She made a lot of money because there were 2 people to a room and she got paid weekly ( a lot of times from parents of teenagers) but she earned every penny!! There was always some drama and the turnover was constant.

Is income from a boarder taxed differently than from a tenant?