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In this “How To” Guide I’ll be giving you the step by step process to legalize a second suite in the Province of Ontario.

Once you decide it’s time to step up to the plate and invest in real estate, I don’t want you to be frustratingly swinging at balls in the dirt. I want you to be patient, waiting for the fast ball straight down the middle, and ready to knock it out of the park. Sorry for the cheesy baseball analogy.

It can only get better from here right? Trust me, it does.

Throughout the rest of this post I’ll be referencing second suite, second unit, additional dwelling unit, and accessory dwelling unit. Know that they are synonymous.

Consider reading Why Second Suites Matter to the Province of Ontario? for more insight on second suites.

Step 1 – Finding, Planning, and Funding

1.. Find properties
My advice is to work with an investment focused realtor. A realtor who has investment properties of their own, and primarily works with other real estate investors. They are a valuable resource to have on your team.

2. Planning to add a second suite
When you find properties, you want to be sure that you can in fact add a legal second suite. Between zoning, by-laws, building code, and fire code; there are many requirements you must contend with. Start by contacting your Municipality’s Building Department OR hire a qualified design professional that already knows these compliance requirements. Whichever route, you need to know what works and what doesn’t before analyzing your numbers. Here are a few things that you must know:

• Does the property’s zoning allow additional dwelling units?

• Is the existing driveway sized for the number of parking spaces and layout required?

• Are there restrictions on the size of accessory dwelling unit you can build?

• Is there a unit size restriction or limit to the number of bedrooms you can have?

• Are the side yard setbacks greater than or equal to 1.2 m (4 ft)?

• Will you plan meet the minimum room sizing required by the Ontario Building Code?

• Is there an existing separate entrance/exit on the front, side, rear, or interior of the property?

• Are there obstructions that will make minimum ceiling heights difficult to achieve?

If you plan on doing this yourself be sure you check out my posts What You Need To Know About Legalizing a Second Suites? and 15 Popular Ontario Cities Second Suite Zoning By-Laws for more detailed information on compliance requirements.

3. Fund the purchase and improvement of that property
The next step is to find yourself a mortgage broker, who just as your realtor, works primarily with real estate investors. They’ll have access to a wide variety of different lenders, including A Lenders, B Lenders, Credit Unions, and Private Money lenders. Offering you the best advice on mortgage products for your short term and/or long term investment strategy to strategically use for scaling your portfolio. You need to decide what that strategy is and communicate this to your mortgage broker. Here are three examples:

• You may want to acquire five, ten, or more properties for the long term.

• You may want to refinance after adding a second suite.

• You may want to renovate and flip properties every three to six months.

For every one of these examples there is a mortgage product best suited for it. Check out my post Mortgage Products You Should Know About to understand why your strategy is so important in selecting the right mortgage product. I also describe three mortgage products which are very different from your conventional mortgage.

Finally, always always be pre-qualified and know what you can afford before making an offer.

4. Submit an offer on that property
Remember when I said a good realtor is a valuable part of your team? By representing you as their client they must put your best interests first. They’ll only send you properties in good locations with great tenant profiles. They will tell you what recent neighbourhood comparables have sold for as well as what the market rents are. They will also know what a realistic After Repair Value “ARV” is when adding a second suite. Once you know the numbers work, you are ready to submit your offer.

Know that we are in a competitive market. Don’t be disappointed if your offer isn’t accepted. Keep repeating this process until you are successful, and when the time comes be ready to knock it out of the park. Again with the baseball analogy…

If you’re unsure how to run your numbers I have a detailed guide titled How To Make Money on an Investment Property It’s an easy to follow format for calculating your 1st Year Return on Investment (ROI), and what I refer to as my FOUR PILLARS©. Read the guide to find out why! As a bonus I also provide a free excel spreadsheet where you can enter your property information and it’ll calculate these FOUR PILLARS© and 1st Year Return on Investment (ROI) automatically.

Step 2 – Design and Construction

1. Hiring a Designer to prepare your permit drawings
You’ll need someone to prepare architectural drawings for your Building Permit application. A Design professional registered with the Ministry of Municipal Affairs and Housing (MMAH) who’s been assigned a Building Code Identification Number (BCIN) is your best bet. The MMAH has created a database named QuARTS where you can search registered individuals and firms by name or Building Code Identification Number (BCIN).

Once you have found a Design professional they will survey the existing floor plan, and optimize your second suite layout based on a number of factors including your input. The Designer is liable for ensuring the permit drawings comply with all Zoning, By-Law, Building Code and Fire Code requirements.

Infinite Design Services can assist you with your permit drawings, construction drawings, finish selections, and more. We look forward to assisting you on your next project!

Important Note: Include conditions in your offer that the seller accommodates multiple visits to the property provided you give ample notice. You need to coordinate these visits with your Designer and General Contractor, so they can see the property firsthand.

2. Application for Building Permit
The Municipality’s Building Department webpage will outline when a Building Permit is required, application fees, drawings and other documents to be included. The drawings list will include a site plan, existing layout, proposed layout, exterior elevations, building cross section, and structural details at minimum. Zoning By-Law, Building Code, and Fire Code compliance must be clearly shown. Other drawings and calculations may be required depending on the extent of work to be performed. Again, verify this by checking the Building Department’s webpage or contacting the Building Department directly.

Some cities offer a residential fast track system for Building Permit applications. This is typically a 10 day review period. Where residential fast track is unavailable, expect a 20 to 30 day review period. It all depends on the Building Department’s capacity.

You can choose to submit the Building Permit application yourself or have a qualified Designer submit the application on your behalf. The benefit of having your Designer submit the application is that it can be done at any time prior to the property’s closing date. If you have been issued a Building Permit before the property’s closing date you are able to start the renovation immediately upon closing.

The only other person who can submit an application is the property owner which means waiting until your closing date. You decide what’s most beneficial to you.

Important Note: Request a recent property survey from the seller. Your Designer will need a copy of the survey to draft an accurate Site Plan. For a nominal fee a digital copy of a recent property survey may also be available through online resources. If the seller doesn’t and it and you’re not able to find it through online sources, you will need to hire a qualified Surveyor to prepare one. This can be $1500 or more in added costs, so budget accordingly.

3. Hiring a General Contractor for the renovation
Unless you plan on doing the work yourself, you’ll need to hire someone for your renovation. You can find General Contractors through referrals from your network or source them a numbers of other ways yourself. Whatever the method, you need to qualify them first. Yes, even referrals. Below are some examples of screening questions you’ll want to ask.

• What type of renovations do you specialize in?

• Who is your primary clientele?

• Are you hiring subcontractor or do you self-perform the work?

• How soon are you able to start?

• Are they familiar with the holdback terminology in the Construction Lien Act?

• Are the registered and covered by WSIB Ontario?

• Do they have General Liability Insurance?

• How often will they communicate progress updates?

When you have your qualified list, you should get a minimum of three bids. Five or more bids would be better. Compare the bids extensively. You want an apples to apples, not an apples to oranges, comparison. Ask questions on anything that doesn’t add up, and have them revise their bids accordingly until is it an apples to apples comparison. Here are some items to compare.

• Are they including for the materials you requested or making substitutions?

• Are there any significant gaps in the scope of work?

• Is the projected schedule of the work similar?

• How do their payment terms compare?

• Who are their subcontractors?

I can’t tell you how to decide on the best General Contractor for your renovation. You may put more emphasis on costs than schedule, or value the individual’s character and reputation more than cost. If you’ve done your qualifications properly, you’re already a step ahead. Make sure you fully understand the terms and conditions of the contract you’re signing through. Look out for the following and amend as you see fit:

• Payment terms

• Change order process

• Material substitutions

• Delays

• Inspections

You may also decide that you’re capable of being the Project Manager / General Contractor for your renovation. In which case the process I outlined above works just as well with screening subcontractors. You can save yourself a lot of money by doing this, but you have to decide if it’s worth it to you. You need to budget. You need to prepare a schedule. You’ll need to qualify each trade in the same way I outlined above. You’ll need to analyze three to five bids for each of those trades and hire each one.

Once you get to the actual construction you’ll need to provide trades’ access, coordinate the sequencing of work, order and delivery of materials, manage costs/schedule and records, handle delays, do accounts payable, and book inspections with Building Officials.

As a Project Manager of 7 years working in the commercial construction industry I can tell you it is not going to be for everyone, but for the ambitious Do-It-Yourselfers out there I’ll show you how to create a detailed project schedule and how you can budget your renovation. Stay tuned for that!

Important Note: Make sure you are familiar with the holdback terms from the Construction Lien Act and know your contractual rights. Request your General Contractor include a Statutory Declaration or similar written document confirming payment to all subcontractors and suppliers for the previous progress payment

4. Building, ESA, and Fire inspections
The inspections required may vary from Municipality to Municipality. Be informed by seeking clarity from the Municipality’s Building Department for your renovation. Use this list as a general guide.

• Building Permit – Framing, Plumbing Rough-Ins, HVAC Rough-Ins, Insulation, Fire Separation, Plumbing Final, HVAC Final, and Building Final

• ESA Inspection – Rough-In and Final

• Fire Marshall/Prevention Officer Inspection – Final

When your final inspections have passed the unit will be ready for occupancy. Ensure you have documentation from the Building Official, ESA Inspector, and Fire Marshall/Prevention Office that all inspections have passed and the Building Permit is closed.

5. Licensing / Registration Application and Fees
The Municipality may have Licensing / Registration requirements for second suites. You will be required to submit an application and pay the registration fee. You may also need to provide confirmation that the Building Permit is closed, a copy of the ESA’s Certificate of Acceptance, and sign off from the Fire Marshall/Prevention Officer. 

Step 3: Closeout 

1. Completing a deficiency walkthrough
As construction comes to a close, spend an hour or more diligently walking through and evaluate the completed work. If you don’t know what you are looking for, reach out to someone who does. Below are some things examples:

• Look for scratches, cracks, chips, or tears in finishes

• Check if door levers are loose

• Run the plumbing fixtures and look for leaks

• Flick the light switches on/off to test that the light fixtures are working

• Check the outlets to make sure they all have power

• Operate the appliances, bathroom exhaust fan(s) and HVAC system

Have your General Contractor accompany you during your walkthrough, so that they can actions these items right away. Document all of the deficiencies found and submit the deficiency list to your contractor to have on record.

Important Note: You have every right to request in the contract terms of payment that a dollar amount is assigned for deficiency corrections and closeout documents. Until all deficiencies are corrected and close out documents provided, they cannot be billed. This will incentivize your General Contractor to correct the deficiencies and provide these documents as soon as possible in order to get paid.

2. Warranties and Close out documents
Obtain a warranty letter, material care instructions, and operating manuals (if applicable) from your General Contractor. The warranty letter should include a one year warranty for all material and workmanship as well as the primary contacts for warranty claims.

3. Get it rented
Start advertising your unit(s) as soon as possible. Book property tours. Screen all tenant applications. Sign the lease agreement.

…And there you have it ladies and gentleman.

The most concise step by step process for legalizing a second suite you’ve ever feasted your eyes on.

As I’ve mentioned throughout, I have several other blogs that expand on many of the topics discussed today.

If you’d like to learn more be sure to check them out!

Good luck in your search! Knock it out of the park!