Fellow submarine officer and I luckily got stationed in Boston together at the same time. We bought a 2-family in Somerville equidistant from both Davis and Porter squares. We are both independently remodeling our separate units (I own lower, he owns upper). Before we condoize the property, we are deciding if we should completely redo the basement and turn it into its own separate 2 bed 1 bath apartment. Estimates from contractors range from 150k-200k for everything. Scope is digging out basement, tuck point, permits, architect, engineer, chimney removal, re configuring HVAC, and everything else. We think we could rent the basement unit somewhere between 1800-2000 a month.
My questions are:
1. Do these numbers make sense?
2. Has anyone in the area seen this and know if it is a worthy investment
3. If so, any tips or advice (especially when it comes to permitting in Somerville) or any other contractors recommended for the job.
Appreciated all the help from BP!!!
It depends how fast you want your return on investment. I recommend doing the math yourself as it's a very good idea to be prepared at what costs and income you will have.
I have heard of people renovating basements so they can make it into a rental.
Make sure when renovating a basement that it can meet Massachusetts Building Code and the Minimum standards of fitness for Human Habitation otherwise the tenant can take advantage and not pay rent. You will need a separate entrance and exit and depending how you charge the tenants separate utilities.
Also keep in mind that if the basement is below grade it won't meet minimum standards of fitness for human habitation:
"No room or area in a dwelling may be used for habitation if more than 1⁄2 of its floor-to-ceiling height is below the average grade of the adjoining ground and is subject to chronic dampness."
Look at your local zoning and whether it would permit 3 units on 1 lot.
For a basement, if 3 sides are below grade, an appraiser is not allowed to count he square footage. So, you may think that it'll bring up the value, because there's now this extra income/tenant, but it may not, if the area can't be counted.
Interesting, thanks guys. We are definitely going to go about this the right way by getting lawyers architects etc and getting it approved by the city. I think as long as we don't meet the chronic dampness requirement then it can be considered as fit for human habitation unless you guys have seen otherwise. I'll look to speak with an appraiser to see if that 3 sides below grade applies to multis here in Boston. From what I've researched and been told it doesn't seem like it, but I know there are a lot of unknowns out there. Appreciate the help so far!
@Joseph Lucido I understand that it is slated to be a 2/1. How many square feet would be the new third unit be? In Somerville, I think a 2/1 of any considerable size would rent above $2k per month (especially given its location).
@David Barnett It would be approx 1100 sq ft. So pretty spacious for a 2/1 here
@Joseph Lucido You could definitely get more than $2k for that size of a unit. I'm sure there are others on BP that know the rental market much better than I in that area. If I were to guess, you could probably get mid $2k's (conservative estimate) per month for that type of unit (depending on finishes, etc).
Hi everyone, anyone looking for deals in Massachusetts? My team and I are looking to expand?
@Joseph Lucido Is the basement usable for anything else as is? Could you put coin laundry or storage down there for the tenants? Obviously you're not going to get 1800-2000 a month for those but you also wont have to spend 150-200k. Just a thought.
another idea is to create storage "lockers" that you could rent out to the tenants above.
Keep in mind when renovating that much square footage of a building and adding a unit your town will likely require a sprinkler system and dedicated fire panel for entire building. What is the value of the completed unit if it's a condo?
If the renovation does not increase the resale value of the property by the minimum of the cost of the renovation then it is not worth the investment. If for any reason you are forced to sell and can not recoup the investment it is lost money that the rental income will not cover.
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