Converting basement to a rental unit

[Jeanette J.]

Hi guys… thanks for all the wonderful posts. This website has been incredibly useful to me starting out. I do have a question. My husband and I are debating on whether or not to convert our basement to a rental unit. We got an estimate to put in an egress door and 3 egress windows. I also got a ballpark estimate to separate the electrical. All in all, it’s going to cost around $50,000 to completely convert it, assuming that the city approves the rezoning. I can rent out the approximately 1100sf basement unit for at least $800 a month. With that income and the $500 income from our first rental, it could be paid off in less than 5 years. If we decided to move out in the future, we could rent the upstairs 2400sf for about $1400 a month. That would be about an $1100 income for the property per month after the mortgage payment including escrow.

Could you guys/gals please share your thoughts with me on whether this is a good idea or not. My husband is leaning towards taking the $50,000 and putting a down payment on another property. I’m leaning towards the basement renovation.

[David Krulac]

@Steve Babiak

I could not agree more. Almost every "Income Property" is a basement redo. In one of my very early properties, I did a basement apt. It already had a bath and a family room, and a private entry so all it needed was a bedroom and a kitchen. The windows were the typical small basement windows and even though it had 2 different exit doors, the windows were not egress. I don't own that property any more and heard that the current owner converted it back to single unit from 2.