# finishing basement



## rookie

we need to finish our basement to make extra room for a live-in caregiver we are planning to hire starting next march. we are not a handy couple, and we also have a 2 and 0 yr old to tend to. so we have decided to hire the professionals to do their job. got a quotation of 18k for finishing about 600sqft including a small 3 piece washroom, a room with privacy for the nanny and the rest would be play area for the kids. just a normal livable basement, nothing too fancy. although i feel, this would be better off than our living area since we hardly made any improvements after taking possession from the builder. now the question to the real estate experts is, if i am blowing 20k into the basement, how much actual value does it add to the house, read how much will i get back when we sell our house?


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## Dana

I seem to recall that you can expect to add 10% of the cost of the reno to the value of your property. So if you put $20k into the basement, it may increase the value of your property by $2K. I believe the percentage is higher for kitchens and baths. 

You also have to consider conformity. For example if your property is one of the few in the neighbourhood that does not already have a finished basement, then you will simply be bringing the property up to neighbourhood standards, and therefore maintaining the value and not necessarily increasing the value. 

You must also consider your potential purchaser. Who would be your potential purchaser if you sold your home? Would this finished basement be an added benefit to them or make the property less attractive? 

Ultimately, adding value to a property is a secondary consideration for us when embarking on a renovation. Our first consideration is always whether it will add value to our life. If we will benefit and we aren't considering selling in the next 5-7 years then we usually go for it.

$18k sounds expensive for 600 square feet, but I guess it depends on the finishes you are putting in and whether the washroom is roughed in?


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## rookie

Dana said:


> Ultimately, adding value to a property is a secondary consideration for us when embarking on a renovation. Our first consideration is always whether it will add value to our life. If we will benefit and we aren't considering selling in the next 5-7 years then we usually go for it.


the decision has long been made that we need it. whether we will remain in the current home for more than 3 years is not really clear. i do not see us moving within that timeframe. there was a thought of moving to a bigger home instead of finishing the basement but thanks to the growth in the real estate market, that is not an option for now.



Dana said:


> $18k sounds expensive for 600 square feet, but I guess it depends on the finishes you are putting in and whether the washroom is roughed in?


since i am not looking at getting anything fancy, just a simple nanny quarters with a washroom (we already have a rough in), how much should i be looking at?

we havent explored the contracting out yet. does anyone in the forum have good referrals?


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## MoneyGal

Ahhh! My head is exploding just a little. The $18K is totally non-deductible, but if you spent the same amount just in childcare (with a non-live-in nanny, for ex) fully $14K is deductible from the income of the lower-earning spouse. 

Go ahead with your plans! I'm just ... I can't get over that cost. $18K and you STILL have to pay the nanny!!!


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## Four Pillars

Dana said:


> I seem to recall that you can expect to add 10% of the cost of the reno to the value of your property. So if you put $20k into the basement, it may increase the value of your property by $2K. I believe the percentage is higher for kitchens and baths.


I think the 10% number is very low.

First of all, it's impossible to really know the effect of various renos on house value - there are just too many variables.

In my opinion, I think the reno you are talking about should add decent value to your house - maybe even up to the cost of the reno.

If the basement is currently unfinished, and you are finishing it and adding a bathroom - that has to add a fair bit to the value of the house since you are really expanding the living quarters.

Of course if you go overboard with fancy stuff, then your ROI will be lower.


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## MoneyGal

HGTV says you will get 50-90% of your money back.


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## DavidJD

I finished my basement - took ages to rip out the old walls and crap, redo the wiring, plumbing, some structure, lots of framing, chipping and redoing some of the slab, new staircase etc. Did it all (top notch I might add) for well under $18K but that assumes I was paid $0.078/hr and lost MANY weekends and evenings over 3/4 of a year. In hindsight I would have appreciated the work being done faster (dedicated workers during the days) but much of the work HAD to be design-as-you-go...opening something up reveals more work that could not have been known.

Having said all that, we have an awesome basment with a rec-room, bedroom separate (large) storage area and a consolodated and usefull utility/appliance work area...not to mention upgrades that benefit the whole house (more effecient overall), and we use it ALL THE TIME. 

Our kids are 22 and 9 months and we finished a month before the youngest arrived. Priceless and super practical. Main floor living space is not a toy store/mess.

Added value? Simple look at the homes in your area, price range that are comparable size etc and see which have finished basements and what they are going for over ones without. I would think 10-15K if done well and is practical.

The rooms that I recall buyers wanting most were #1 Rec-room, #2 bedroom, #3 bathroom, #4 second bedroom/storage room #5 Whatever was not in #4, #6 workbench/'sewing room' space

...laundry, H20 tank, furnace, elec panel, etc are assumed to be there but preferred to be in the same area. i.e. water line not coming in a bedroom, sewer access not in rec-room, elec panel not in bathroom...

About the Nanny...cannot comment. Daycare is the way to go $-wise for us.


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## HaroldCrump

$18K for 600 sq. ft. doesn't sound too bad.
We got our basement finished professionally 3 years ago and it's similar dimensions.
Ours came in around $16.5K including fixtures.
Worth mentioning: there were no rough-ins previously. It was as unfinished and bare as it could be 

One suggestion I have is to ask for price quote with and without fixtures.
Unless the difference is minimal, buy the fixtures yourself and only pay for labour and building materials.
And if the difference is minimal, I'd ask the contractor why 
I figure you might be able to save a grand or so in fixtures if you shop around.


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## Addy

I agree, 18K for 600 sq which includes a three piece bathroom doesn't sound bad at all. Just make sure they pull plumbing, electrical and if any structure work is done, structure permits. Sorry if you're pro-permits, I've just seen a lot of homeowners get screwed over because the contractor convinces them that permits are just a "tax grab"...!


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## GeniusBoy27

*RE: Renovations for the basement*

I'm going to say that "investing" in the basement is probably not the ideal situation, but if you look at CVA of houses, the basement is the least valuable portion.

Most housing goes at $200/square foot in Toronto (that's the constructor's cost). With the profit, about $250-$300 sounds about right. So for you, I'd say $15-18K would be the approximate cost, depending on how much construction needs to be done downstairs.

But as a value side of things, I'd probably say your investment gets you back about 25% of its value.


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## Cal

Yeah, I don't know if it is an investment. As you are guaranteed a financial loss. But it is usable space for your family.

Get 3 quotes...just to keep them honest.

Finishing a basement should cost at least 10-12K. Could cost more depending upon rough-ins, window's have to be a legal size for a bedroom to have fire exit safety...there are a few things to consider.

My guess...home value goes up 5-10K.


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## Rob_23

Really so your all saying that by essentiall adding square footage to your home by finishing your basement, you'll get a negitive return on your reno. Does this apply to every situation (burbs/city/rural)? I thought this would add some + value.

... well atleast I do all my renos myself, it helps to get a + return. Already got a basement, kitchen, 1 bathroom and misc. jobs under my belt and another bathroom in progress.


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## GeniusBoy27

*Renos*

Rob:

Nope ... we're saying there is a return, but compared to the money invested, it's not as much.

i.e. if you put in 25K, the value of the house goes up by 10K.

You rarely get a positive return on investment, in most renovations.


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## Four Pillars

GeniusBoy27 said:


> Rob:
> 
> Nope ... we're saying there is a return, but compared to the money invested, it's not as much.
> 
> i.e. if you put in 25K, the value of the house goes up by 10K.
> 
> You rarely get a positive return on investment, in most renovations.


This may or may not be true.

If I'm looking at 2 identical townhouses, one with a finished basement (5 years old) that I know would cost $20k, the other unfinished (and I would have to pay the $20k plus deal with the hassle) are you telling me that a regular buyer would only assign a value of 10k (or whatever) to that basement reno?

In my scenario, I'm likely to do a calculation something like, $20k (cost of reno), + $5k (hassle factor) - depreciation amount, depending on how old the reno is.

For a fairly new reno, I would be willing to pay more than the cost of the reno. For something a bit older, maybe 75% of the cost.

Obviously, there are other factors - do I like the finished basement etc?

I'm not saying all renos are good investments, since clearly they aren't but I just don't get this super-low valuation for a reno where you are adding something useful that wasn't there before.


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## iherald

You may get a nice rebate for an energy audit. I'm not sure what province you're in, but I know in Ontario you'll get something for putting insulation in the basement. Worth some thought.


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## rookie

Four Pillars said:


> This may or may not be true.
> 
> If I'm looking at 2 identical townhouses, one with a finished basement (5 years old) that I know would cost $20k, the other unfinished (and I would have to pay the $20k plus deal with the hassle) are you telling me that a regular buyer would only assign a value of 10k (or whatever) to that basement reno?
> 
> In my scenario, I'm likely to do a calculation something like, $20k (cost of reno), + $5k (hassle factor) - depreciation amount, depending on how old the reno is.
> 
> For a fairly new reno, I would be willing to pay more than the cost of the reno. For something a bit older, maybe 75% of the cost.
> 
> Obviously, there are other factors - do I like the finished basement etc?
> 
> I'm not saying all renos are good investments, since clearly they aren't but I just don't get this super-low valuation for a reno where you are adding something useful that wasn't there before.


you may be right. but the crux is whether the potential buyer "needs" the basement or not. if he doesnt, he is not going to pay a penny more. i am guessing this is where the hgtv and other folks arrive at the payout ratios (as mentioned in the links previously in this thread). i guess the payout ratio is derived from the pricing point. if i put in 20k for the basement and price my house 20k mroe, i would lose 0$ but will be ruling out 50% of potential buyers (assuming even probability of people needing it vs not needing it). if i price it 0$ more, then i will be luring all buyers but the people who really need the basement might bid for more than asking. if i price it lets say 10k more, then maybe i lose 50% of my investment while i might lure more potential buyers. maybe this is why the payout mentioned was 50-90% in the 2 links and it would rarely fetch 100%.


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## rookie

iherald said:


> You may get a nice rebate for an energy audit. I'm not sure what province you're in, but I know in Ontario you'll get something for putting insulation in the basement. Worth some thought.


thats an interesting suggestion. i am in ontario and last time i checked the cost of the audit and the rebate i would get cancelled out each other. since my home is newly built, i figured there is not much energy savings i would make with any reno worth its salt. maybe i should revisit this once the basement is done.


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## Berubeland

I am a big fan of investment real estate but your single family home while it may increase in value cannot really be classed as an investment per se. 

What is important is your use of the home and enjoyment of the space you have. As you have mentioned you have considered moving to get more space. The real estate fees for you to sell your home will likely be more than your basement renovation.

Spending the money to get better more efficient use of the space will save you money and increase your enjoyment of your home. Real Estate Fees, Closing costs and moving stress and expenses will add to more than the cost of the renovation. If you some back upon sale BONUS 

Go for it !


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## Four Pillars

rookie said:


> you may be right. but the crux is whether the potential buyer "needs" the basement or not. if he doesnt, he is not going to pay a penny more. i am guessing this is where the hgtv and other folks arrive at the payout ratios (as mentioned in the links previously in this thread). i guess the payout ratio is derived from the pricing point. if i put in 20k for the basement and price my house 20k mroe, i would lose 0$ but will be ruling out 50% of potential buyers (assuming even probability of people needing it vs not needing it). if i price it 0$ more, then i will be luring all buyers but the people who really need the basement might bid for more than asking. if i price it lets say 10k more, then maybe i lose 50% of my investment while i might lure more potential buyers. maybe this is why the payout mentioned was 50-90% in the 2 links and it would rarely fetch 100%.


That's a very good point.

I guess I tend to use my own situation when I try to evaluate this sort of thing. Obviously different home buyers have different needs.

In my area, the houses are not that big and come with short, unfinished leaky basements. EVERYONE wants a nice basement, but it costs a fortune. I can guarantee that if you fix up a basement in my area (ie dig it out, waterproof, finish nicely etc) then you will get a large percentage of your money back.

Of course if your house is a 4,000 sq ft macmansion, then maybe finishing the basement doesn't really do much for the value.

This is a good example of why I don't like "rules of dumb".


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## HaroldCrump

I agree with Berubeland's post above.
I do not consider primary residence as an "investment".
I know it exhibits investment-like behavior and can be used as such, but leveraging it like that creates the mess that the US is in right now, IMHO.

For the same reason, do not think of your basement finishing as an investment that you need to "recover" or "get a return on".

You will probably get some return out of it, esp. if the potential buyer prefers a finished basement and is willing to pay slightly higher price for it.
Depending on how long you stay in this house, the PV of that slight extra premium may not be worth much - definetely not enough to offset the current expenses for finishing the basement.

If I were a buyer, I personally would not buy a house with a finished basement.


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## rookie

Berubeland said:


> I am a big fan of investment real estate but your single family home while it may increase in value cannot really be classed as an investment per se.
> 
> What is important is your use of the home and enjoyment of the space you have. As you have mentioned you have considered moving to get more space. The real estate fees for you to sell your home will likely be more than your basement renovation.
> 
> Spending the money to get better more efficient use of the space will save you money and increase your enjoyment of your home. Real Estate Fees, Closing costs and moving stress and expenses will add to more than the cost of the renovation. If you some back upon sale BONUS
> 
> Go for it !





HaroldCrump said:


> I agree with Berubeland's post above.
> I do not consider primary residence as an "investment".
> I know it exhibits investment-like behavior and can be used as such, but leveraging it like that creates the mess that the US is in right now, IMHO.
> 
> For the same reason, do not think of your basement finishing as an investment that you need to "recover" or "get a return on".
> 
> You will probably get some return out of it, esp. if the potential buyer prefers a finished basement and is willing to pay slightly higher price for it.
> Depending on how long you stay in this house, the PV of that slight extra premium may not be worth much - definetely not enough to offset the current expenses for finishing the basement.
> 
> If I were a buyer, I personally would not buy a house with a finished basement.


i definitely am not considering it as an investment. i am basing this decision on need. but when it comes to "how nice do you want your basement to be", then this is where i want to know "well how much will i really get back" because, this is mainly for the nanny or kids play area. so i want to keep the expense at a min. but the contractor says that the difference b/w basic and a nice one is not much since the major cost is all labor...


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## HaroldCrump

rookie said:


> but the contractor says that the difference b/w basic and a nice one is not much since the major cost is all labor...


From _his_ perspective, yes, but not from yours.
Fixtures, flooring, nice furniture, lighting, etc. will add-up costs for you.
I guess depends on what you consider "major".
You could easily spend $3K (or more) extra on fixtures.
For your basement ($18K), that is more than 15% extra.


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## eddave121

HaroldCrump said:


> $18K for 600 sq. ft. doesn't sound too bad.
> We got our basement finished professionally 3 years ago and it's similar dimensions.
> Ours came in around $16.5K including fixtures.
> Worth mentioning: there were no rough-ins previously. It was as unfinished and bare as it could be
> 
> One suggestion I have is to ask for price quote with and without fixtures.
> Unless the difference is minimal, buy the fixtures yourself and only pay for labour and building materials.
> And if the difference is minimal, I'd ask the contractor why
> I figure you might be able to save a grand or so in fixtures if you shop around.


I also agree. spending 15-18k depending on your construction is not so bad. Having a basement will add up to your asset's value and will add up all clients want to purchase basement included house. The ROI is not so bad at all.


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## yyz

You realize that you are responding to a thread that hasn't had a post in 6 1/2 years?


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## My Own Advisor

I wouldn't expect to get any money back actually. Best case, maybe 25%, maybe....

Mainly because you don't know your comparables until you sell and there are so many other factors that go into home ownership for prospective buyers.

It's part of the cost of maintaining the home - unfortunately.

(Yes, realize this yyz - I had some inspiration to respond!)


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## bobsyouruncle

Edit: Can you not embed images around here?


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## welsh-investor

I have also done a renovation on my basement. To determine the additional value it would add to my home I did a little research. What I found is that typically a finished basement will add another $40-60 per square foot. So, a 600 square foot basement would add $30,000 to $40,000 depending on the home's location.


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## carverman

I've done a couple basement improvements in my day, and I would have to agree with some of the responses that a basement renovation will only add about 10% to the value of the home. While adding a extra bedroom with bathroom (2 or 3 piece) can add resale potential, it doesn't necessarily add that much extra value to the home when selling.

A 20 x 30 foot basement area (600 sqft approximately) can be good for a small 10 x15 bedroom (150 sq ft), and a 15 x 20ft living space (300 sq ft) living space area with a 10 x 10 kitchenette/bathrom area (100sq ft), it can be quite an expensive undertaking these days.

Wall insulation, insulated floor, electric baseboard heating , toilet and drain plumbing, the electrical and plumbing modifications will add significant cost along with any permits + reassessments.

The big hurdle is to provide a fire escape egress for the live-in person. Basement windows have to be enlarged in that case and that can add significant costs to the renovation.


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## Marty Gordon

I'm not sure where these folks are getting their numbers from....but I create basement apartments for a living. I do this on properties that I OWN and then I have them appraised. Normally I get about 180% return on my investment, and occasionally 200%. So in other words, if I spend 50k, I increase the value of the property buy roughly 100k. 
Here's a link to one of my video series that documents the entire process:


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## Danny

Marty what city are you living in. Watched your videos (great by the way). I am in Ottawa. Would like to ask you a few questions about a basement apartment.


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## carverman

Say what you will, but spending $20k,$50k or more on a basement renovation, with the intent that you can recover the money spent, and then some...is wishful thinking in most cases.

While a RE appraser can tell you that the renovation "adds considerable value" to the resale of the property, 

it all depends on locale and the area you live in, and whether the basement is separate from the rest of the house and considered INCOME PROPERTY for the new homeowner. 
If the new owner can rent out the finished basement (done to code) for $1000 a month to help with mortgage payments, then maybe.

Real estate agents go by the average prices of homes in your area, and if the average is say $300k, and you spend $50K on basement renovations in the hope of recovering your investment and then some...you may be in for a big surprise.

While buyers may appreciate that the basement has an extra bedroom, rec room for the kids and maybe a two piece washroom in the basement, the listed price is compared to other homes in the same area that may (or may not) have a finished basement. 

After all with the 20% down requirement now needed to even qualify for a mortage,
the monthly mortgage payment + taxes +utilities and the listed price (that is subject to negotiation) is what will determine whether the house you just spent $20K renovating the basement is worth a second look, if the same style house next to it is listed $20K to $50K cheaper.

Sure, you can go above the RE recommendations to arrive at a listing price, but then you run the risk of not selling it because it's just listed too high for the area.


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## Marty Gordon

carverman said:


> Say what you will, but spending $20k,$50k or more on a basement renovation, with the intent that you can recover the money spent, and then some...is wishful thinking in most cases.
> 
> While a RE appraser can tell you that the renovation "adds considerable value" to the resale of the property,
> 
> it all depends on locale and the area you live in, and whether the basement is separate from the rest of the house and considered INCOME PROPERTY for the new homeowner.



This is a better way of putting it. It all depends on what you do to the basement. There are people that spend thousands on work, but do it incorrectly, and don't do it to code, or even pick really ugly finishes that nobody else likes. In these cases, it's not really adding any value. In some cases you might be lowering the value of your house if everything has to be re-done. But if you are creating an income property by making a legal apartment, now THAT is some real value added.


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## Marty Gordon

Danny said:


> Marty what city are you living in. Watched your videos (great by the way). I am in Ottawa. Would like to ask you a few questions about a basement apartment.


Hi Danny,

Thanks for the comment! I'm in Guelph Ontario. I generally invest in properties in the Guelph/Kitchener/Waterloo areas. If you want, send me an email to ask a more in depth question: [email protected]


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## CalgaryPotato

All renovations are not equal, the 10% number refers to renovating an already functional space. For example if you replace a perfectly good counter top, with a granite one, you probably aren't going to recover the full cost of the upgrade on a sale. 

That said, taking a completely unfinished basement and finishing adds real value to a house. It's tough to say exactly how much, but it's going to be more than 2-3 thousand dollars. That number that someone said about 10% of the total value of the house is probably closer in this case.


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## Danny

I will Marty. Thanks.


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## AltaRed

Solicitation and spam in a thread last commented on 3 years ago. Where do these characters come from?


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## Mukhang pera

AltaRed said:


> Solicitation and spam in a thread last commented on 3 years ago. Where do these characters come from?


Looking at the flag, I would say from India.


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## off.by.10

AltaRed said:


> Solicitation and spam in a thread last commented on 3 years ago. Where do these characters come from?


Some business hires a marketing firm to increase their visibility on google or whatever. A few subcontractor hops later, the money ends up paying people in a third world country to post spam. I doubt they check the thread dates ;-)


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