Hi! I'm new here, and have been absorbing all the great information on this site. I kinda feel like I'm on information overload. How do you factor in unfinished space into deal analyzing? Example: ''1 Br/1Ba with unfinished potential for basement studio" is how the post reads. Do you factor it in as repairs estimating the cost of finishing the unit? With just the one unit, the property makes no sens. With two units, makes pretty good sense. Just curious. Thanks so much!

I'm going to say the same thing I've said many times on these forums.

Work the numbers.

Consider: 1 br/1ba with unfinished basement -- Flipping or Renting? How much to you make in either case? Numbers!!
Consider: 2 br/1ba, a Finished Br in basement -- F/R? How much after Improvement Expense? Numbers!!
Consider: 2 units, 1 br/1ba and Basement Studio Rental -- F/R? Add a Kitchen and Bath Expense? Numbers!!

Compare each of those and see if any of them make sense for a GO decision. If you can't make the numbers work, or you can't get the seller to accept an offer where the numbers work, then take a pass.

My point is, nobody can answer your question definitively without running through all the numbers. Don't post them here, nobody wants to do your homework for you.

One quick snarky remark (sorry!): "Do you factor it in as repairs estimating the cost of finishing the unit?"
WELL DU-UH!! You factor in every expense! How you choose to label the expense is up to you.

OK, snark over. Grab that calculator and get to work! Good luck!

@Alvin Sylvain well thanks for making me feel so welcome!! I was trying to understand how people use the calculators to their best advantage and for advise, which you gave, thank you. I wasn’t trying to make anyone do my math, or work my numbers. Perhaps I should have worded my question differently, I’ll learn as I go.

Originally posted by @Sarah Laird :

@Alvin Sylvain well thanks for making me feel so welcome!! I was trying to understand how people use the calculators to their best advantage and for advise, which you gave, thank you. I wasn’t trying to make anyone do my math, or work my numbers. Perhaps I should have worded my question differently, I’ll learn as I go.

Of course you're welcome! But hey, sometimes you gotta go through the fire! :-) Better here than at a tax audit ...

No worries, we're all learning as we go. But now you know -- this is a numbers game! Work the numbers, and you'll already have your answer!

Another thing I often do is recommend that people get acquainted with the BP calculator, or just about any other REI calculator. I personally like the one from DealCheck. Just figuring out how to work the calculator is an education in itself. It'll ask you stuff like, "How much to allocate for Cap-Ex?" and the first time I saw that I went, "HUH?" (a very important expense that often gets overlooked with rentals)

So again -- best of luck!

@Alvin Sylvain thank you! Yes, getting acquainted with all the terms and calculations. I appreciate it!

@Sarah Laird adding an entire extra unit is not repairs. It gets added into the cost basis of the property and depreciated.

Thank you

Hey Sarah,

I believe the bp calculator gives you the option to add any renovations you plan on making as well as your expected arv