Turning Basement into Rental Unit

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Does anyone have experience with turning a basement into a rental unit? What are the challenges/obstacles in doing so?

My current situation is that I have a seller who countered me and the price they are asking would make a meh deal. However, adding an extra $350-$400/month from adding a third basement unit would definitely make it worth it. The property is a duplex and the basement is unfinished on one side and partially finished on the other side. It currently has a kitchen area, a 1/2 bathroom and another open room. I could figure a way to turn this into a small, livable area by adding a shower, bedroom area, renovating it, etc. I am just concerned about unforeseen obstacles such as occupancy requirements, mailbox issues, city permit issues, etc. Any help is appreciated!

Originally posted by @Austin Hanse :

Does anyone have experience with turning a basement into a rental unit? What are the challenges/obstacles in doing so?

My current situation is that I have a seller who countered me and the price they are asking would make a meh deal. However, adding an extra $350-$400/month from adding a third basement unit would definitely make it worth it. The property is a duplex and the basement is unfinished on one side and partially finished on the other side. It currently has a kitchen area, a 1/2 bathroom and another open room. I could figure a way to turn this into a small, livable area by adding a shower, bedroom area, renovating it, etc. I am just concerned about unforeseen obstacles such as occupancy requirements, mailbox issues, city permit issues, etc. Any help is appreciated!

 This is a very common renovation in my area. Usually it got two main problems. One is legalizing it, have a CO for 3 when it's a duplex. They wouldn't do it if the area is only zoned for two. The other for basement units is egress. You can convert it to a legal living area if it's got two egresses, such as a window large enough to climb out, must be a certain size, plus a door to the outside. They're thinking of adding criminal penalties if people are killed when they couldn't get out in cases of some renovations. 

The third problem in NY is a legal 3 is built to a different standard to two requiring fire escapes etc., a concrete enclosed furnace room etc. 

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