A basement does not have to be a dark, forgotten space in your investment property. It can turn into a second bathroom, bedroom, or another source of income. Read on to learn about basement renovation costs and return on investment (ROI).
#1 ROI vs. Basement Renovation Cost
Basement renovation costs can be pricey, but this type of renovation provides a 70 percent average ROI nationwide For houses in Massachusetts and other New England states, the ROI averages 52.8 percent. The cost of a basement remodel depends on the type of remodel and the planned use of the space. The nationwide average cost for a midrange basement remodel is $71,115, while in New England it’s $76, 429.
Of course, the size of the basement helps determine the cost of a renovation. For a small 300- to 700-square foot basement, the price typically ranges from $9,000 to $52,000. Renovating a 1500- to 2,000-square foot basement, however, can cost from $45,000 to $150,000.
#2 Increases Home Value
As a property investor, you’re keeping your eye on the bottom line — especially your property value. Basement renovations tend to increase the resale value of homes. You will likely be able to recoup a good chunk of your expenses when you sell your property.
Let’s say you’re spending $50,000 on a Boston-area basement renovation. With the typical ROI of 52.8 percent for the region, your resale value could increase by $26,400.
#3 Increase Living Space
With a basement renovation, you can increase the living space of the property without enlarging its footprint. This is an important advantage if zoning codes prevent you from expanding outward or upward. In some neighborhoods, an addition may not be possible because it will be too close to the neighboring house. Other locations have a two-story limit on homes. If your property has a basement, you can still add that extra room or apartment.
#4 Increase Income
If zoning laws allow it, you can turn the basement into a rental unit and increase the income potential for the property. If you keep the property after the renovation, you will have increased cash flow from the additional unit. If you sell the property, the potential income from the renovated basement is a good selling point. A buyer may see the rental income as a chance to ease the burden of mortgage payments.
#5 Additional Uses for a Renovated Basement
An additional bathroom can be a deciding factor for a home buyer. The cost of hiring a plumber for this renovation can be worth it when it’s time to sell the property.
Adding a bedroom increases the size of the home as well as potential rental income. A bedroom must have two forms of egress, such as windows, so the project will likely involve knocking down foundation walls to create openings.
Since it is below ground, noise from loud parties or kids playing will be muffled. A basement is an ideal location for a recreation room if you don’t want to disturb the neighbors.
With more than 15 years of general contracting experience, RH Blanchard will give your Boston-area basement renovation the care it deserves. Get in touch for a free consultation.