Is Finishing Your Basem*nt a Good Investment? (2024)

1st February 2022

Want to transform that unused basem*nt into a livable space? Is it even worth finishing a basem*nt? The short answer is yes, if it’s done right. A finished basem*nt not only adds extra square footage to enjoy but also has the potential to boost your home’s resale value.

If you’re lucky enough to have this bonus underground space, this guide will help you learn everything you need to know about renovating your unfinished basem*nt.

How Much Value Does a Finished Basem*nt Add?

In the US, finishing a basem*nt will give you a return of 70 to 75% of your investment. That means if you spend $10,000 on improvements, the value of your property will increase by about $7,000. Although you may not recoup 100 percent of your expenses, that’s a good return on investment for most home sellers.

How much you recoup also depends on the area you live in. For instance, homes in the Pacific region have the biggest finished basem*nt return on investment. Here, the average finished basem*nt can get an ROI of 86%. On the other hand, finished Basem*nts in New England have the lowest return on investment. In this region, the average ROI is 80%.

Ways a Finished Basem*nt Adds Extra Value to Your Property

Here’s what finishing a basem*nt would do for you:

• Increases Buyer Appeal – A finished basem*nt makes your home more attractive to buyers. Since the pandemic began, many buyers have been increasingly looking for homes that can accommodate office workspaces, gyms, and space for remote learners. A house with a finished basem*nt fits that profile.
• A Second Income – You can turn a finished basem*nt into an income property, which will give you extra cash monthly. The rental income can be used to offset the costs of the mortgage.
• Recreational Space – If you don’t want to be a landlord, then you can turn the basem*nt into a playroom, craft room, a home theater, or even a basem*nt bar.
• Extra Livable Space – Adding livable space in your basem*nt will free up space upstairs when you have overnight guests. You can also use the finished space as a home office, storage room, or bathroom.

What is the Cost of Finishing a Basem*nt?

Converting an unfinished basem*nt into a liveable space is a significant undertaking. But exactly how much does it costs to finish a basem*nt? For a 400 to 1,500 square foot space, expect to spend around $20,000, which is the national average. Some spend as low as $3,000 and others as high as $80,000, depending on the size and style of the space.

The total amount you spend to finish a basem*nt will depend on several factors, including the type and quality of materials you use, the kind of space you want to create, the contractor labor rates, permits fees, and the furniture and decor you settle for.

Important Things to Consider Before Finishing Your Basem*nt

Before you decide to transform your lower-level into an additional living area, take these factors into account.

• The Value of a Finished Basem*nt – If you are finishing in order to sell, enlist an experienced realtor to help you determine the ROI of the project. The expert will also help you figure out how to minimize the basem*nt budget and still increase the home’s value.
• Budget – Decide how much money you are willing to invest in this project. Talk to an expert contractor to determine what a good budget is and to learn what is doable within your price range.
• Local Building Code – There are certain laws associated with having a living space in your basem*nt. You will need to research and meet all building codes in order to actually finish the basem*nt. Your ceiling height can limit you if there is no headspace, and you may need to add an egress window.
• Structural Problems – If your basem*nt is contaminated with mold, has bad smells, water leaks, crack on the walls, an unstable foundation, or other structural problems, you need to promptly take care of those issues before finishing it.
• Safety – Safety is important in your basem*nt, so test it for mold and radon gas, have an escape door or window in case of fire and flooding, add ample lighting, and create safe access handrails. Wiring, plumbing, gas lines, and heating systems should also be safe.

A Finished Basem*nt Will Give Your Property an Edge

Your basem*nt doesn’t have to be dark and gloomy. In fact, finishing your basem*nt is a great investment that can enhance your property’s value while also making it a seamless extension of your home.

You can turn the unused space into an income property, guest bedroom, home office, bathroom, or play area. If completed at the same quality as the upper levels of your home, it will boost your home’s marketability to potential buyers and even help you fetch more when you sell.

Remember that finishing a basem*nt is a job best left to the professionals. Consult an experienced contractor who has completed projects similar to what you need.