Adding a Basement Unit - Costs and ROI?

10 Replies

Good Morning,

My partner and I own a brick two-flat (duplex is the term used everywhere else -- or so I'm told) in Chicago that we currently occupy.  We have a full dry basement that is 50% below ground and as such has great windows/lighting throughout.  We also have two doors for egress.  I'm wondering what kind of costs I could anticipate for building out a 1BD/1BA unit down there.  It's big enough to do two beds but I'd rather maintain some common area for laundry.  Are we talking like $60K?  I understand there's a lot of variables so I'm just looking for a ball park.  We would want to fit it with mid-grade finishes in hopes to get $700-$800 a month.  I purchased this property before I learned about the 1% rule (I'm at .85% if I rented my unit) and I'm looking to maximize the investment as I plan to hold this property for years to come.  I am more likely to afford this additional investment before I can afford another building in Chicago (looking to avoid condos).

Any thoughts, inputs, or anecdotes around similar experiences are greatly appreciated. :)

I looked into this for my first property that I am now am using as a rental. It is a 1200sq ft ranch on a sloped lot. The basement has 12' of ceiling height at the back and slopes up to about 5' near the front of the house. I was planning for a 650sq ft separate living space/apartment to rent for about $700-800 a month. Rough in bids were about $30K to get excavated, additional slider cut into the concrete foundation and framing/flooring in place. I am a very handy guy so after frame in I would take on most of it. $60K sounds in the range to have it completely turn key ready. I think its a great idea. My wife vetoed the plan as she was not comfortable with someone living below our house when I travel. Now that it is a rental its back on the future improvement list

@Bradley Levy  -  Is it currently finished?  Or is it cement and brick?  Is the roof height at least 7 feet 6 inches?

If it is from cement/brick to fully finished my guess would be $45k, I know if plumbing/electrical is already roughed in you could do it for $35k.

If it is not 7 feet ceiling heights then you will need to dig down the basement, that alone is about $40k

Brie Schmidt, Real Estate Agent in Illinois (#471.018287) and Wisconsin (#57846-90)

I turn basements into units frequently, if you have the ceiling height I typically charge $35k-$40k with the finishes you described. 

Thanks for all the input. From the sounds of it I would need to excavate. :( I don't think the ceiling is tall enough. The question is does that investment return dollar for dollar in equity if I spent that kind of money. At that cost it would take me more than 8 years to bring in the rent to even come close to a break even.

ceiling height needs to be 7' 6" to be legal. To dig down and finish completely you are going to be at $55k-$60k.

Another approach could be duplex down to had more space to the first floor unit which in return you should get more money.  You can avoid any zoning issues and the buildout will be cheaper if you don't have to add another kitchen, furnace, a/c, water htr, etc.... From a management standpoint it is one less tenant to manage.  Adding another unit can be a pain when it comes to the city so don't DIY and hire someone like mike B.  

I have also seen people keep the ceiling in finished (more of a loft/industrial look) to get the height they need if only off by a couple of inches.  Doing this you have to make sure you have the insulation/fire rating required. 

@Mike B.  undefined

Mark Ainley, Real Estate Agent in IL (#471.003954)

@Bradley Levy  I have a similar project I am planning on doing in the near future on my brick 2flat's unfinished basement (about 1000 sq ft) in Chicago. Keep me updated on how this goes for you if you decide to get it done.

@Mike B.   does the 7' 6" ceiling height include any HVAC soffits or is just the general ceiling?  Also, the basement floor (concrete) has slight slopes to them near areas where there are drains in the basement floor, is there anyway to even these out with thin layers of concrete or will that have to be dug and filled with thicker layers of concrete? If so what is a rough estimate on something like that

I also have a brick 2 flat in Chicago.  I got a quote for 60k to do a similar build out.  30K of that was for waterproofing and plumbing.  We have no rough ins for plumbing and when we get heavy rains I get a few inches of water in the basement.  

Before spending that kind of money you should check your zoning.  Most 2 flats are soned for only 2 residences and adding a 3rd would require upzoning.  From what I have heard that is hard to get the city to sign off on.

Good luck and definitely post your results if you do go through with the project.

If your in an area that gets water, I recommend interior drain tile and overhead sewers to keep it dry.  Sewer water backup is the biggest issue in Chicago in my opinion only solved by Overhead sewers

@Justin Poulsen  nailed it. @Bradley Levy  I looked into this a long time ago and I believe every neighbor within a certain feet range had to sign off on it and the city needs to review. I believe the non-refundable application alone was thousands. Additionally, why would neighbors sign off on more people/traffic on their street. If you track this down let us know as we would be interested. Cheers!