Exploring Opportunities in Bungalow Conversions Amid Rising Interest Rates

Josh Perez • July 28, 2025

As interest rates continue to rise, the real estate market is seeing some major shifts. While the rapid growth of property values we saw in 2020 and early 2021 may feel like a distant memory, there are still opportunities for savvy investors to make profitable moves. One strategy I’ve been closely examining involves bungalow conversions, a trend that thrived when interest rates were at historical lows but is still relevant in today’s market with the right approach.


The Bungalow Conversion Trend

Back in the peak of the market—when interest rates were at rock-bottom levels—investors were purchasing bungalows in the $500,000 to $700,000 range, adding significant renovation costs (sometimes $100,000, $150,000, or even $200,000), and converting them into multi-unit properties. These properties would often see their value skyrocket, with two units bringing in over $1 million on the market.


This surge was fueled by the low interest rates, often between 1.5% and 2.5%, which made it easier for investors to carry larger mortgages. With rental income supporting mortgages of $800,000, investors could break even or even cash flow a bit, making the bungalow conversion strategy an attractive option.


The Shift: Rising Interest Rates

Fast forward to today, and interest rates have climbed significantly, ranging between 5% and 6%. This change in the lending landscape has made it harder for many investors to cash flow properties in the same way they did a few years ago. With higher mortgage payments, properties that once offered positive cash flow are now operating at a loss.

But there’s still a way to make this strategy work—by adding more rental income streams. The key is increasing the number of units within the property.


Running the Numbers: Maximizing Rental Income

Let's break down how adding a third rental unit to a property can still make bungalow conversions profitable in today’s market.

  • Main Floor Unit (3-bedroom): If this unit rents for around $2,300 per month, that’s a solid start.
  • Basement Unit: Depending on the property and its location, basements can typically rent for $1,600 to $2,000 per month. Let’s take an average of $1,800 for this example.
  • Detached Garage Unit: A separate garage can be converted into a rentable unit, bringing in an additional $1,700 to $1,800 per month.

By adding a third unit, the total monthly rental income could reach up to $6,000, or more. This significantly changes the cash flow dynamic. For a property with a mortgage of $800,000 to $900,000 at today’s rates, the added rental income can offset the higher mortgage payments, allowing the property to cash flow positively rather than negatively.


The Bottom Line

While the rising interest rates have made it more challenging to generate positive cash flow from traditional rental properties, the bungalow conversion strategy remains a powerful tool for investors. By converting a single-family home into a multi-unit property—whether by utilizing basements or adding a detached garage unit—you can create multiple streams of rental income that make the property viable, even in today’s higher-rate environment.

In summary, the strategy is still worth exploring. With the right renovations and rental income projections, you can still cash flow and potentially see a great return on investment in today’s market. The key is running the numbers, understanding your rental potential, and adapting to the changing landscape of real estate financing.

By converting a single-family home into a multi-unit property—whether by utilizing basements or adding a detached garage unit—you can create multiple streams of rental income that make the property viable, even in today’s higher-rate environment.

Josh Perez
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New to Credit? Let’s Build a Solid Foundation

By Josh Perez • September 24, 2025
Starting from Scratch: How to Build Credit the Smart Way If you're just beginning your personal finance journey and wondering how to build credit from the ground up, you're not alone. Many people find themselves stuck in the classic credit paradox: you need credit to build a credit history, but you can’t get credit without already having one. So, how do you break in? Let’s walk through the basics—step by step. Credit Building Isn’t Instant—Start Now First, understand this: building good credit is a marathon, not a sprint. For those planning to apply for a mortgage in the future, lenders typically want to see at least two active credit accounts (credit cards, personal loans, or lines of credit), each with a limit of $2,500 or more , and reporting positively for at least two years . If that sounds like a lot—it is. But everyone has to start somewhere, and the best time to begin is now. Step 1: Start with a Secured Credit Card When you're new to credit, traditional lenders often say “no” simply because there’s nothing in your file. That’s where a secured credit card comes in. Here’s how it works: You provide a deposit—say, $1,000—and that becomes your credit limit. Use the card for everyday purchases (groceries, phone bill, streaming services). Pay the balance off in full each month. Your activity is reported to the credit bureaus, and after a few months of on-time payments, you begin to establish a credit score. ✅ Pro tip: Before you apply, ask if the lender reports to both Equifax and TransUnion . If they don’t, your credit-building efforts won’t be reflected where it counts. Step 2: Move Toward an Unsecured Trade Line Once you’ve got a few months of solid payment history, you can apply for an unsecured credit card or a small personal loan. A car loan could also serve as a second trade line. Again, make sure the account reports to both credit bureaus, and always pay on time. At this point, your focus should be consistency and patience. Avoid maxing out your credit, and keep your utilization under 30% of your available limit. What If You Need a Mortgage Before Your Credit Is Ready? If homeownership is on the horizon but your credit history isn’t quite there yet, don’t panic. You still have a few options. One path is to apply with a co-signer —someone with strong credit and income who is willing to share the responsibility. The mortgage will be based on their credit profile, but your name will also be on the loan, helping you build a record of mortgage payments. Ideally, when the term is up and your credit has matured, you can refinance and qualify on your own. Start with a Plan—Stick to It Building credit may take a couple of years, but it all starts with a plan—and the right guidance. Whether you're figuring out your first steps or getting mortgage-ready, we’re here to help. Need advice on credit, mortgage options, or how to get started? Let’s talk.

Bank of Canada Rate Announcement Sept 17th, 2025

By Josh Perez • September 17, 2025
Bank of Canada lowers policy rate to 2½%.  FOR IMMEDIATE RELEASE Media Relations Ottawa, Ontario September 17, 2025 The Bank of Canada today reduced its target for the overnight rate by 25 basis points to 2.5%, with the Bank Rate at 2.75% and the deposit rate at 2.45%. After remaining resilient to sharply higher US tariffs and ongoing uncertainty, global economic growth is showing signs of slowing. In the United States, business investment has been strong but consumers are cautious and employment gains have slowed. US inflation has picked up in recent months as businesses appear to be passing on some tariff costs to consumer prices. Growth in the euro area has moderated as US tariffs affect trade. China’s economy held up in the first half of the year but growth appears to be softening as investment weakens. Global oil prices are close to their levels assumed in the July Monetary Policy Report (MPR). Financial conditions have eased further, with higher equity prices and lower bond yields. Canada’s exchange rate has been stable relative to the US dollar. Canada’s GDP declined by about 1½% in the second quarter, as expected, with tariffs and trade uncertainty weighing heavily on economic activity. Exports fell by 27% in the second quarter, a sharp reversal from first-quarter gains when companies were rushing orders to get ahead of tariffs. Business investment also declined in the second quarter. Consumption and housing activity both grew at a healthy pace. In the months ahead, slow population growth and the weakness in the labour market will likely weigh on household spending. Employment has declined in the past two months since the Bank’s July MPR was published. Job losses have largely been concentrated in trade-sensitive sectors, while employment growth in the rest of the economy has slowed, reflecting weak hiring intentions. The unemployment rate has moved up since March, hitting 7.1% in August, and wage growth has continued to ease. CPI inflation was 1.9% in August, the same as at the time of the July MPR. Excluding taxes, inflation was 2.4%. Preferred measures of core inflation have been around 3% in recent months, but on a monthly basis the upward momentum seen earlier this year has dissipated. A broader range of indicators, including alternative measures of core inflation and the distribution of price changes across CPI components, continue to suggest underlying inflation is running around 2½%. The federal government’s recent decision to remove most retaliatory tariffs on imported goods from the US will mean less upward pressure on the prices of these goods going forward. With a weaker economy and less upside risk to inflation, Governing Council judged that a reduction in the policy rate was appropriate to better balance the risks. Looking ahead, the disruptive effects of shifts in trade will continue to add costs even as they weigh on economic activity. Governing Council is proceeding carefully, with particular attention to the risks and uncertainties. Governing Council will be assessing how exports evolve in the face of US tariffs and changing trade relationships; how much this spills over into business investment, employment, and household spending; how the cost effects of trade disruptions and reconfigured supply chains are passed on to consumer prices; and how inflation expectations evolve. The Bank is focused on ensuring that Canadians continue to have confidence in price stability through this period of global upheaval. We will support economic growth while ensuring inflation remains well controlled. Information note The next scheduled date for announcing the overnight rate target is October 29, 2025. The Bank’s October Monetary Policy Report will be released at the same time.