Disclaimer: This article is for informational purposes only and should not be considered legal, financial, or real estate advice. All figures provided are approximate and based on information available online at the time of writing. Please consult with a financial advisor, real estate professional, or legal expert for personalized advice.
In urban centers like Toronto, where housing costs are high, families are exploring innovative solutions to accommodate aging parents. Garden suites, also known as accessory dwelling units (ADUs), have emerged as a popular and cost-effective option.

In this article we examine the financial benefits of investing in a garden suite compared to the costs of retirement living. It also includes an analysis of financing options for those who may need to borrow money to build their garden suite.
The Cost of a Garden Suite
The cost of building a garden suite in Toronto typically ranges from $200,000 to $300,000, depending on size, design, and materials. This cost includes design and architectural fees, permits, construction, and utility connections.
Comparative Costs: Garden Suite vs. Retirement Living
1. Retirement Living Costs
The average monthly cost for retirement living in Toronto ranges from $4,500 to $6,000, depending on the level of care and amenities provided. (seniorspages.ca) Assuming an average monthly cost of $5,250, the annual cost is $63,000. It is important to note that these figures are based on single occupancy cost, with the cost increasing for couples. See below for single occupancy costs over time.
Adjusting for 2% annual inflation:
Timeframe | Annual Cost (Adjusted for Inflation) | Total Cost Over Time |
5 Years | ~$69,555 | ~$328,854 |
10 Years | ~$76,795 | ~$721,000 |
20 Years | ~$93,700 | ~$1,585,000 |
Break-Even Analysis: Garden Suite vs. Retirement Living
If you're weighing the options of building a garden suite and retirement living, you may be wondering; At what point does the garden suite break even over the cost of retirement living? To help you understand the long term cost benefits of a garden suite, we've done some basic math for you.
Comparing the cumulative costs:
Garden Suite Investment: $200,000 to $300,000
Retirement Living:
5 Years: ~$328,854
10 Years: ~$721,000
20 Years: ~$1,585,000
Break-Even Points:
A garden suite costing $200,000 breaks even in less than 4 years.
At $300,000, the break-even point is around 5–6 years.
As you can see, even without factoring in the increased value a garden suite will bring to your property, it is a worthwhile investment that pays for itself relatively quickly.
Financing a Garden Suite: Considering Borrowing Costs
Not all families have immediate funds to build a garden suite, but financing options like Home Equity Lines of Credit (HELOCs) or personal loans are available. Here’s an analysis of borrowing costs based on current interest rates:
Financing Assumptions
HELOC Interest Rate: 5.85% (WOWA.ca)
Personal Loan Interest Rate: 9% (finder.com)
Loan Terms: 5, 10, and 20 years
Borrowing Costs for a $250,000 Garden Suite (Midpoint of Range)
Financing Option | Term (Years) | Monthly Payment | Total Repayment | Total Interest Paid |
HELOC (5.85%) | 5 | $4,816 | $288,960 | $38,960 |
10 | $2,757 | $330,840 | $80,840 | |
20 | $1,781 | $427,440 | $177,440 | |
Personal Loan (9%) | 5 | $5,188 | $311,280 | $61,280 |
10 | $3,157 | $378,840 | $128,840 | |
20 | $2,057 | $493,680 | $243,680 |
How Does Financing Impact the Break-Even Point?
Even with borrowing costs, garden suites remain competitive over time:

Against Retirement Living:
A 10-year HELOC repayment ($330,840) still offers significant savings compared to $721,000 for retirement living.
The garden suite breaks even within 5–6 years, even with financing.
Additional Considerations
Family Contributions: In some cases, aging parents may contribute funds toward the construction of the garden suite, reducing or eliminating the need for financing.
Property Value Appreciation: Although there is not enough historical data to provide an precise number, the trend indicates a positive influence on property value. Some sources project that a Garden Suite or ADU could increase your property value as much as 20-30%. This translates to $240,000 - $360,000 for a 1.2 Million Dollar Home. It is important to note that these percentages are only projections.
Rental Income: Additionally, a well-designed garden suite in Toronto can command monthly rents between $5,000 and $7,000, depending on location and size, providing a steady income stream that not only helps offset construction costs but also boosts financial stability. For more information on using Garden Suites to generate rental income, check out our blog article How You Can Generate Rental Income Without Buying Another Property: The Benefits of Garden Suites in Toronto and Hamilton
Transportation Savings: Having parents close eliminates commuting costs to external care facilities, saving thousands annually.
Emotional and Quality of Life Benefits: Garden suites provide independence and foster stronger family bonds, offering intangible benefits that enhance well-being.
Conclusion
The garden suite is a financially and emotionally rewarding solution for housing aging parents in high-cost areas like Toronto. With a cost range of $200,000 to $300,000, the break-even point for this investment remains competitive compared to retirement living, even when financing is considered.
Families should assess their financial situation and explore options such as HELOCs, personal loans, or family contributions to determine the best approach.
If you want more information on Garden Suites or ADUs, Contact Imperio Construction for more information.
Disclaimer: This article is for informational purposes only and should not be considered legal, financial, or real estate advice. All figures provided are approximate and based on information available online at the time of writing. Please consult with a financial advisor, real estate professional, or legal expert for personalized advice.
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