Appraised 3rd Bedroom? Rental Property Walkout Basement

5 Replies

Hi BP family!

Recently purchased our first rental home in Baltimore City, Maryland using Hard Money. We need to confirm whether we can turn the basement into a 3rd bedroom. The house is currently listed as 2 bed, 1 bath. If we can safely and under the proper rules/regulations turn the basement into a bedroom, then we can refinance with a higher ARV. If not, that's perfectly fine!

We have asked several people (Baltimore City, Contractors, RE Agents, etc.), but have no clear answer on whether our basement could qualify as a 3rd bedroom and the black and white to verify.

Based on the attempted drawing to scale of the basement, are we able to make the basement a 3rd bedroom?

If not, what modifications do we need to make to make it a 3rd bedroom?

We reviewed the international Property Maintenance Code (https://codes.iccsafe.org/content/IPMC2018/chapter-4-light-ventilation-and-occupancy-limitations). Chapter 4, we reviewed the sections below. However, we wanted to make sure our basement fit these requirements to make it a 3rd bedroom.

1.402.1 Habitable Spaces

2.403.1 Habitable Spaces

3.404.2 min room widths

4.404.3 Min ceiling heights

5.404.4.5 Other requirements

6.404.4 Bedroom and living room requirements

From the pictures

  • the basement window is greater than 44inches from the ground on the inside. Window is currently not egress, but can certainly be replaced if needed.
  • There is a walkout door right next to the window, so I’d imagine, that is what is necessary for an emergency.
  • Front side of basement has another window (same size as back), and has a view to the underside of the porch. Side of porch has a wooden hinged door that allows someone to “crouch” for access. Not clean, but possible.
  • Ceiling height is 7ft. Currently open wood, if we add a ceiling, then it will be lower than 7ft.

Originally posted by @Nathanael Rojas:

If we can safely and under the proper rules/regulations turn the basement into a bedroom, then we can refinance with a higher ARV. If not, that's perfectly fine!

We have asked several people (Baltimore City, Contractors, RE Agents, etc.), but have no clear answer on whether our basement could qualify as a 3rd bedroom and the black and white to verify.

 There are always 3 numbers/facts/answers to any question.

- Real answer. It feels like a bedroom, it rents like a bedroom, it's a bedroom.

- Gov't answer. Supreme court says tomatoes are vegetables, not fruit. Doesn't matter what the scientists say, the government fact is that it's a veggie. 

- Industry specific answer, in this case the mortgage industry (since appraisals are done to FNMA standards). 

The mortgage answer is that if it is below grade, it will not be a bedroom. 

It will be a finished basement and compared to other properties that have finished basements. If finished basements add value in your specific market(1), then it will add value in the appraisal report.

(1) Think of an outdoor swimming pool in Arizona v Alaska, with that in mind you can't just say "oh a swimming pool adds $X in value" without knowing if we're in Alaska or Arizona... it would be a PITA and decrease value in Alaska!

Asking questions is like getting a doctors opinion, it depends on who you ask. If you truly want a answer to your question submit a application for a building permit. You will then receive a difinitave response.

I agree with Thomas regarding the local building department. Most of the time you can take the hand sketch you already have and talk to them over the counter. Make sure you are OVERLY NICE to them as they are ultimately the ones that are going to interpret the building code for you (and yes the building code can be interpreted... sadly). With that being said you definitely have the International Code Council requirements to classify it as a bedroom (you'll also want to add a closet) so you should be fine. You really have to maintain the min requirement of 7ft finished ceiling height though. That would be my biggest concern. Depending on the design style of your area you might be able to get away with the "industrial" look of a polished concrete floor but putting even 1/2in drywall on the ceiling is going to push you out of compliance. For these reasons, I'd really just go and talk to the building officials.

Good luck!

@Chris Mason what about in this case? Yes it is below grade in the front of the house but the basement has a full height walkout. Does that still count as below grade?

Some Baltimore houses, like the one pictured, have the kitchen in the basement. Would the bank claim there is no kitchen? LOL

Originally posted by @Ned Carey :

@Chris Mason what about in this case? Yes it is below grade in the front of the house but the basement has a full height walkout. Does that still count as below grade?

Some Baltimore houses, like the one pictured, have the kitchen in the basement. Would the bank claim there is no kitchen? LOL

 If the kitchen is down there, I'm sure it'll count as GLA/kitchen.

It can be a coin toss with these wonky properties. I saw two appraisals two weeks apart on one where it's below grade in the front and above in the back. $550k v $950k. Big national AMC v my AMC.