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Does A Basement Apartment Add Value To Home?

Homeowners are always looking for ways to create more livable space in their homes. A great way to increase the livable space in your home is by converting the otherwise vacant basement into an apartment. But as a homeowner, I am sure you are wondering, “does a basement apartment add value to home?” So after thorough research, this is what I found out.

Basement apartments would typically increase the value of your home property. A basement apartment is a livable space situated below the ground level. Basement apartments reside under another structure, an apartment building, a home, or a business building.

A basement apartment can provide you with some additional living space for your aging parents, a returning college graduate looking for a rent-free space where they can live while saving some cash or a rental unit. In this article, we’ll show you the benefits of adding a basement apartment. We’ll also show you how a basement apartment can add value to your home.  

What Is a Basement Apartment?

Basement apartments are unique living spaces that have become quite popular in numerous North American cities thanks to their affordability. After all, the rent for these apartments is lower than the cost of renting the other types of apartments. And that is because of the many deficiencies found in these apartments.

These apartments are usually cramped and quite noisy thanks to the traffic from the adjacent road and the uninsulated noise from the building. And in some places, converting your basement into an apartment is illegal, but homeowners still do it anyway. After all, the homeowner needs the extra space to generate more income. (1)

Does a Basement Apartment Add Value to Your Home?

Yes, basements have a considerable potential to add value to your home. And by adding a basement apartment, you can create extra rooms for your loved ones on your property. But make sure basement apartments are legal in your city before building one.

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In the U.S., a finished basement can increase the value of your home by about 70% of the amount spent on creating a basement apartment. It means that if you spend $10,000 on the basement apartment, the value of your home will increase by about $7,000. (4)

Besides creating more room for your family, adding a basement apartment can also serve as a source of income. You can rent the apartment and earn some cash every month. But before you convert it into a rental unit, it has to be approved by your town’s zoning department.

After all, any living space must conform to your regions’ fire code. It means that it should have two forms of egress and one entrance. Some states will require each rental unit to have a dedicated parking space, making sure you familiarize yourself with the local code.   

If you plan on selling your property, then the basement apartment can appeal to potential buyers who would like to profit off the rent from the basement apartment to pay off part of their monthly mortgage. Therefore, your home won’t stay in the market for too long, and it will fetch you more cash.

If you’re adding a basement apartment to a home you’re holding onto, then this rental unit will increase your cash flow.

How Can You Earn More From Your Basement Apartment?

If you’re a handy individual, you can try and save a massive amount of your cash by doing most of the renovation jobs yourself. And outsource technical jobs like plumbing or electrical work. If you can design and lay the flooring, put the drywall, frame the walls, or even paint the apartment after it’s complete, you can save a significant amount of your cash.

People don’t expect the basement apartments to include using high-end materials. Some materials like hardwood can be a bad option for the basements as moisture can destroy them. You can spend less on the materials for building a basement apartment; after all, its finishes don’t have to be as expensive as the finishes on the rest of your home.

Remember, folks renting a basement apartment are just satisfied with an affordable living space with flooring, light, and heat.  (4)

Is Our Basement Apartment Legal?

The building codes for determining if a basement apartment is legal varies with state and city. And in New York City, the city’s legal guidelines demand that the ceiling be at least 7ft high. The basement apartment should also have numerous exit points. (2)

It is lawful to occupy a basement of a home with two families by meeting the following requirements:

  • The apartment must comply with the region’s housing maintenance code.
  • The minimum height of the ceiling must be about 7 ft.
  • The walls must be water and damp-proof.
  • Family members must occupy the basement apartment.

You can lawfully rent basements in a one-family house by meeting the following requirements:

  • The apartment must comply with New York City’s maintenance codes for the minimum measurements for the rooms.
  • The basement must be occupied by one family and never include boarders
  • Every room must have at least a single window
  • The base of the yard shouldn’t be higher than 6 inches below the apartment’s windows.

You cannot rent the basement of a house occupied by two families if adding a new family will change the house’s status to multiple dwellings of more than three families. And this will require you to get a new occupancy certificate from the local department of buildings.

What Should I Do Before Renting My Basement Apartment?

Renting a basement is not as easy as renting an apartment or a spare floor in your building. You will have to adhere to the local codes for turning it into a legal living space. But make sure you confirm the local zoning laws and confirm if it’s even legal to rent your basement.

You should also be ready to spend a considerable amount of cash on getting the space up to code. It means adding extra exit points, fireproofing, and insulating the basement. (6) Insulating the walls and grounds of the basement can protect the occupants from low temperatures and noises. (5)

You will also have to waterproof the entire space and update the electrical and plumbing lines. Occupants of basement apartments are prone to carbon monoxide poisoning, so make sure you add carbon monoxide detectors in this space. If living in New York City, you should ensure that your basement apartment has met the above requirements before renting it out.  


Is It Ideal to Live in a Basement Apartment?

Yes, a legal basement apartment that meets all the local building codes is safe for everyone. After all, the owner must address all the possible dangers of living in basements like carbon monoxide poisoning and high moisture levels before renting it out. So make sure you ask for the certificate of occupancy before moving into a basement apartment.

What Makes a Basement Apartment Illegal?

A basement apartment that hasn’t met all the building codes is illegal. It means that it’s less than 7 feet high and doesn’t have the needed exit points. A basement apartment can become illegal if the number of families occupying the building exceeds the number stated in its certificate of occupancy.   

What Is the Fine for Renting Out an Illegal Basement Apartment?

A landlord who operates an illegal apartment endangers the lives of his/her tenants. And if caught, you can be fined about $15,000. (7)

Final Thoughts

A basement apartment can be an excellent investment that can do more than increase the value of your home; it can also increase your cash flow. But make sure it adheres to the above requirements before turning it into a rental unit. After all, as a landlord, you have to ensure that your home is safe before renting it out.