Is a Finished Basement worth it?

7 Replies

Bought SFR at auction for a buy and hold (brrrr). I need to rehab so I can pull out my money in a refi. Previous owners started framing the basement to finish. Question is for a rental should i finish the basement? Or does this upgrade not really matter. I am more interested from the sppraisal perspective. Does a finished basement count as added sq footage vs unfinshed.

From an appraisal standpoint, you'll get "partial credit" for below grade square footage.  It won't be worth the same as finished square footage above grade, but it will be worth more than unfinished square footage.

I've typically heard estimates that finished basements are worth 50-70% of above grade living space. But that will depend on the specific area, the specific appraiser and what kind of basement it is (walk out, non-walk out, etc).

@Toan Hoang   A finished basement = more livable sqft.  More sqft often = higher sale price.  But it all depends on your comps.  Can you turn it into another bedroom?  That always adds a nice chunk of value to a house

@Michael Ablan Unfortunately cant be a bedroom. Its below grade and the windows are too small. I think windows need to be certain size to qualify for bedroom due to fire code. But i really wish it could be a bedroom. That would be a real money maker.

Great thread! Piggybacking on this a bit more... I have a 2bdrm 1 bath bungalow (buy and hold) in a nice area of Denver. Thinking of finishing off the basement to include a master suite (1bdrm+full bath) and a decent size entertainment/living area.

Two questions:

1. I hear mixed views on how appraisers view this: After completing the basement, will it just be appraised as a "2bdrm, 1bath, plus furnished basement" or will it be appraised as a 3 bdrm, 2bath house?

2. Is it worth trying to put in another small bedroom in the basement to make this a 4bdrm, 2bath house?

@Mark Wilson I think that a bedroom has some legal requirement such as window and a closet. So if its a walk out basement than it probaly would be easier to do it. If not you would need to build out windows somehow. A quick google search will define legal requirements for bedrooms in your area.