Financial experts in the United States have been discussing the potential of an impending recession for several months now, but that doesn’t make the possibility any less intimidating for the average American. Luckily, there are plenty of ways you can prepare for a recession and one of them is remodeling your basement into an apartment.
In this series, we’ve discussed why a recession may create an increased demand for rentals and how your basement remodel can provide an affordable place to live for those in need. But what does the cost of such a project actually look like and will you profit from it in the end? Let’s explore the costs of finishing your basement and what it will take to pay it off.
Part 3: The Cost Breakdown of a Basement Renovation and Paying it off With Tenants
Each basement remodeling project is going to cost a different amount, depending on the size of the space and a variety of other factors. On average, the cost to finish a basement is $55 to $65 per square foot. This means that a 500-square-foot basement will cost about $30,000 to refinish and a basement of 1,200 square feet would cost about $70,000.
A basement with an open floor plan will be the most cost-effective way to remodel it into an apartment. The more walls you put up, the more you have to pay for drywall and framing. If you keep the space between the kitchen and basement family room open and simply section off rooms for a bedroom and a bathroom, you’ll have a viable apartment to rent without extremely high costs.
If you already have a finished basement family room with insulation, waterproofing, plumbing, and electricity, you’re most of the way to creating an apartment. The living room alone accounts for about 41% of the costs, so you’re not spending too much if that area is already done.
As each element of a remodel costs a different amount, let’s look at a breakdown of the different projects you may need to do during a remodel.
- HVAC: $3,300 to $5,900
- Flooring: $6 to $10 per square foot
- Drywall: $1.60 to $2.35 per square foot
- Electrical panel: $850 to $1,700
- Interior painting: $1.50 per square foot
- Plumbing: $2,000 to $5,000
- Bathroom addition: $2,500 and up
- Kitchenette or wet bar addition: $3,000 and up
- Closet addition: $1,000 and up
These numbers may seem high, but here’s some perspective: finishing your basement costs about 80% less than buying a larger home. When you consider that you could transform your simple basement family room into an entire apartment, the price of the remodel is a steal.
When you rent out your finished basement apartment, you can pay off the costs fairly quickly with your tenants’ contributions. If the remodel costs you $40,000, you would be able to charge your tenants just over $1000 per month and recoup your costs in a little more than 3 years. For a couple or a small family, this would be a pretty affordable monthly rent payment.
If you’re interested in starting your basement remodel before the recession’s effects are noticeable, contact Elkstone, Inc today. By having experienced professionals working on your basement apartment, you can rest easy knowing that you will have high-quality work that lasts for years to come.