To BRRRR or Not to BRRRR

1 Reply

Hello BP!

I purchased a 3/2 SFR with an unfinished walkout basement last summer. It is a SFR, but I have been renting it to college students by the bedroom. I was able to convert a spare room into another bedroom, so the upstairs is now a 4/2. I have now completed finishing the walkout basement into a 2/1 with living room and full kitchen. So, I would basically consider it an up/down duplex that does not have separate utilities. I would look into converting it into an actual duplex with separate utilities, but I have not had any trouble finding groups of 6 that all know each other. So, they all split utilities easily. It is also a small town in a historic district, and they seem somewhat tough on zoning changes.

I am happy with the total cash flow after finishing the basement to have 6 total bedrooms. But, I am wondering if I can capture back some of the value I added when I finished the basement. Researching online it seems like it is a toss up if the basement can be counted in an appraisal, and sometimes only at a fraction of the above grade value.

Should I:

1. Get an appraisal on my own just to see what it appraises for. Then assess my options?

2. Try to start the process with my bank of cash out refinance, and then if the appraisal does not come back high enough not go through with the refinance?

3. Try to formally zone and convert it into a duplex, and aim for a much higher appraisal?

4. Something else?

Thanks in advance for any input!


Hi @Nick Spenello ,

When I did a cash out refi on my SFR, I had to pay for an appraisal as part of the closing costs. I assume you're going to have to do the same thing. You'd essentially be spending $200-500 to get the confirmation that you should start the loan process, then spend another $200-500 as part of closing the loan.

My understanding of a duplex appraisal is that the appraiser will look at the same thing they look at as when appraising a SFR; they won't necessarily give you a higher appraisal because you've got multiple tenants. If your town has a lot of duplexes where you can find a bunch of comps to support the refinance, then going for the re-zoning might be your best best. If not, you may just want to keep the house a single family residence. This is all just my opinion though, I've never been in the same situation.