Finishing basement before rental?
Hi BP, wanted to gather your thoughts on what return you'd require on capital used to finish a basement. We'll be doing the majority of it ourselves, and a conservative estimate is $15k with about 20% margin for 750 sqft. This adds another bed, bath, finished laundry room, and rec area. Potentially a wet bar (included in that number) or without it knock a few grand off for cabinets and countertops.
The home is our current home that we've live-in-flipped over the last couple years and just cash out refi'd with the intentions to 'move on to the next one' in a year. It's a 1200 sqft 2/2 condo with loft very high finish quality that I estimate 1800-2000/mo in rent. Lower quality finishes in the same complex go for 2100+ with basements.
I've seen some posts about if the basement can generate another 100-200/mo (ie 8-16% on capital) it's a no brainer. It'll also add equity, although from prior appraisals they usually add about 15-20k in this area, so not a ton past what we're putting in.
The hangup is if we don't do this now we'll likely never do it once it goes into service. What's BP's thoughts on to finish or not to finish the basement?