The “Van Life” converted garage
We all see the popularity of Van life on Youtube. It’s arguably cheaper than renting in most cases and allows the freedom of living in some of the most expensive cities. Although I am a fan of Van Life (In my case car life as I like to camp in my car while traveling) I started to think how Van Life can help with achieving FIRE goals.
Sometimes it is not possible to buy a large house with two suites. But what about buying a town home or rancher with an attached garage on a low income? It certainly is possible. A 3 bed 2 bath town home could go for $450,000 in my area. If you get a good mortgage broker they could take into account renting out the town house as well as combining that with B lenders in order to qualify you for a mortgage with a low yearly salary. Assuming a 4.5% interest rate (1% higher since you are dealing with “B” lenders) your mortgage payment would be $2,379.93 with 5% down. Market rent for a 3 bed 2 bath in my area is $2,400/month with a 10% discount (discount to find good tenants).
Okay that’s great but where do I live? Unfortunately, In high cost areas such as Vancouver, Toronto and Victoria getting creative with your living situation is a must if you want to become financially independent at a young age. This is where Van Life principals comes into play. Instead of converting a depreciating asset like a van, why not convert an appreciating asset? Here’s the idea, convert the attached garage on your home into a livable suite. This can be done without installing illegal plumbing and structures. If the fixtures such as the kitchen and bathroom are designed in the same manner as a Recreation Vehicle then no permits are required. That’s how you get around the building code to hack your way into affordable living. Here are some general steps to make the garage into a suite.
- Make the garage warm and safe. If not done already you could install insulated garage door panels and replace the seals around the doors. Put down areas rugs or wall to wall carpet to keep the floor warm. Insulate the walls with an attic blown in insulator such as this one from home depot. Drill 4 inch holes with a hole saw between the studs and fill up with insulation using the attic cat blown in insulator which you can rent from Home Depot. Then patch up the holes and paint. The garage at this point should be warm and safe and you did not need to get permits for any of this.
- Add some extra electrical outlets (if the garage is not well equipped already). Permits will be needed for this however the building department will issue this no problem as its normal to put extra outlets in a “garage”.
- Add a kitchen. See the picture below of an example kitchen. Van Life uses a kitchen involving a grey water jug and clean water jug under the sink with some sort of hand or electric pump to the facet. Designing a self contained kitchen like the ones used in van life do not require any permits as no plumbing gets connected to the house. The gray water jugs get dumped in the compost in the back yard and the clean water jugs get filled up from the hose tap. The stove would ideally be an induction portable cook top since we have access to power (Van life would use a propane stove). A fridge would be a standard residential fridge.
- The bathroom would utilize a composting toilet. A designated area in the back yard would be utilized for this high quality compost perhaps in a compost bin. A shower would be as simple as large bin with a shower curtain and a shower head connected via pump to a bucket of hot water. The hot water would be heated on the convection portable stove and poured into the bucket (1 part boiling water to 3 parts room temp water). When the shower is done simply take the bin out side and dump it in the garden. Both the kitchen and bathroom are not connected to plumbing and is portable therefore no need for permits.
- Heat. A portable 110volt heater connected to a built in thermostat is all that is needed (perhaps two if double garage in a very cold area) .
Okay so it is possible to do a “Van build” in the garage not requiring any permits. The build can be simple and affordable more complex, that is up to you. So how does this help me get my financial freedom in order to do the things I love. The cost to own this hypothetical $450,000 home is ~$1200 mortgage interest+ $200 property taxes + $250 maintenance, insurance and garage improvements which is $1,650 a month. Since the tenants are paying 2400 a month renting the main part of the house you are getting paid net ~$750 a month to live there . Also assuming the price of the house goes up in value at least 3% per year conservative estimate (it’s actually averaged 7% since 2000 in my area) we would have an additional $13,500 per year or $1,125 per month. So we are getting paid 1875 per month over the long term to live in our “Van Build” garage. Again we didn’t make any structural changes or add plumbing so no need for permits.
This type of lifestyle requires a minimalist approach. It requires us to be respectful of our tenants and neighbours. While we are technically not allowed to live in the garage I think it would be worth the risk. If a noisy neighbour ever complained, then we would just say we use the garage for storage or as an art studio or whatever and there is nothing they can do since we did not make any structural changes etc. However, although unlikely if the issue is pushed worst case is we would have to move out of the garage and into the main house. That being said, being paid $1875 per month is worth the risk.
If you could save an additional $2,500 per month on top of the $1875 in equity and appreciation for at least 5 years invested a total market ETF then you would have about $410,000! Continue on this path for 10 years and you would have over 1.5 million generating 60-75k a year in passive income likely completely tax free.
An example of a “Van Life” super simple kitchen that doesn’t require permits pictured below. This simple set up would cost less than $400 to make and includes a sink connected to fresh and grey water jugs, mini fridge and hot plate. This a very simple design, but the general idea is there.
With a little effort the garage suite could look like this.
Main photo credit: https://thevanproject.com/8-vanlife-kitchen-must-haves/