Short answer? Yes—significantly.
Garden suites are becoming a smart financial move for homeowners and investors across Toronto. These self-contained backyard units don’t just offer more room—garden suite can increase property value by 10–30% and create a rental income. If you’re investment-minded, this is a serious return on investment opportunity worth exploring.
Let’s summarize it with numbers, examples, and honest contractor understanding.
Why Garden Suites Add Value
1. Direct Boost in garden suite property value
A well-designed garden suite can increase the value of your home by $240,000 to $550,000 or more, depending on the build quality, size, and location. Adding a legal, income-generating suite for a typical $1.2M home in Toronto can push your resale price significantly higher.
Real-world example: A $350,000 garden suite property value that generates $3,300/month in rent could boost your home’s market value by $340,000 to $1 million. It depends on how much the market is worth and how much money it can make. When you have experience in construction, you will see how buyers like properties ready to rent out, even if it’s a good business for investors.
2. Steady Rental Income
Based on their location and design, garden suites offer a steady monthly income, usually ranging from $2,500 to $4,500. In addition to this financial benefit, they also provide appreciation over time.
Even a modest 600 sq ft unit renting at $3,300/month can earn you $39,600/year, which helps offset the upfront build cost (often recouped within 8–12 years). After that, it’s profit.
Investor tip: Focusing on long-term tenants (rather than short-term Airbnb-style rentals) avoids city caps on nightly stays and attracts steady, trustworthy income.
3. Meeting Multigenerational Needs
Toronto is seeing an increasing need for multi-family housing. Many buyers today are looking for homes that can accommodate aging parents, adult children, or in-laws, and a garden suite is a perfect fit.
Over 25% of homebuyers in the GTA are actively looking for homes with this setup. It’s not just about the money; it’s about flexibility and future-proofing your home.
What Affects the ROI of a Garden Suite?
| Factor | Impact on Value |
|---|---|
| Design Quality | High-end finishes, sound insulation, and energy-efficient features boost resale. |
| Location | Suites in high-demand areas (Annex, Roncesvalles, East York) earn 15–25% more rent. |
| Legal Compliance | Permitted units sell 10–15% higher and move faster on the market. |
| Utility Upgrades | Proper electrical (200 AMP service) and sewer capacity make a big resale difference. |
Risks to Be Aware Of garden suite increase property value
- Construction Costs: Expect to invest $200,000 to $550,000, depending on size and finishes. Smaller units often cost more per square foot. Please check our portfolio for garden suite increase property value.
- Selling Challenges: Some buyers may prefer larger backyards over rental potential, especially in low-density neighborhoods.
- Tree Protection Bylaws: Mature tree removal (30+ cm trunk diameter) can delay projects and add permit complications.
How to Maximize Your Garden Suite Investment
Prefab vs. Custom:
Prefab garden suites can save you 10–15% in costs, but custom builds offer better layout flexibility and attract higher-paying tenants.
Use Incentives:
Take advantage of Toronto’s Certified Plans Program (for faster permits) and federal programs like CMHC’s multi-unit financing. You may also qualify for Toronto’s $50,000 forgivable loan for building secondary units.
Target Long-Term Renters:
Avoid short-term rental limits and find consistent monthly income with quality tenants who treat the unit like a real home.
Case Study: North York garden suite increase property value
- Build Cost: $350,000 (600 sq ft, mid-range quality)
- Rental Income: $3,300/month ($39,600/year)
- Value Increase: ~$340,000 (based on 5.5% cap rate)
- Break-even Timeline: ~9 years
After year 9, the homeowner continues to earn passive income, with the property value appreciating year-over-year.
Final Thoughts: Is It Worth It ?
If you’re an investor, builder, or homeowner thinking long-term, the answer is clear:
Garden suites increase your property value in Toronto.
They offer:
- Strong capital appreciation
- Consistent monthly income
- Multigenerational flexibility
- Tax advantages
- Future resale premiums
The upfront costs are significant, and the permitting process can be complex. Still, when done right, this is one of the smartest property investments in Toronto.
Frequently Asked Questions (FAQ)
1. How much does a garden suite increase property value in Toronto?
On average, a legal, well-designed garden suite can increase property value by 10–30%. For a $1.2M home, that could mean an increase of $240,000 to over $500,000, depending on location, finishes, and rental income potential.
2. How much can I rent a garden suite in Toronto?
Rental income typically ranges from $2,500 to $4,500/month, depending on size, location, and design. In high-demand areas like the Annex or Roncesvalles, rents can go even higher, sometimes up to $7,000/month for luxury finishes and larger units.
3. How long does it take to recoup the cost of building a garden suite?
Most homeowners break even in 8 to 12 years through rental income. After that, it’s pure equity growth and monthly profit. Strategic design and long-term tenants can shorten this timeline.
4. Are there any tax benefits to building a garden suite?
Yes. You may be eligible to deduct mortgage interest, depreciation, and maintenance costs related to the rental unit. Toronto also offers a $50,000 forgivable loan to help finance secondary suites for rental housing.
5. What are the most significant risks or downsides?
The main challenges are:
- High upfront cost ($200K–$550K)
- Potential permitting delays
- Loss of backyard space
- Market preference (some buyers prefer more yard over rental potential)
However, if done legally and with proper planning, these risks can be minimized.
6. Is a prefab garden suite increase property value better than a custom build?
Prefab units are more affordable (10–15% cheaper) and faster to install but offer less design flexibility. Custom builds cost more but attract higher-paying tenants due to tailored layouts and finishes. It depends on your goals—speed vs. long-term ROI.
7. Can I build a garden suite on any property in Toronto?
Not all lots qualify. You’ll need:
- Adequate lot size and rear yard access
- Utility capacity (like 200 AMP electrical service)
- No significant tree protection or zoning conflicts
Toronto’s bylaws have become more flexible, but always check with your architect or builder before moving forward. If you need some assistance please fill our form online .