Anne Ts, Other/Just Looking in East Fishkill, NY

Is converting a finished basement into a rental unit a good financial move? Would it increase the house value, how are rents in the area?

Asked by Anne Ts, East Fishkill, NY Sun Jul 29, 2012

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Your first call is to the building department to find out if it is legal to rent in your basement, or not. Do not trust any real estate agent on this matter! Most don't know enough about building codes.

In many municipalities all basement apartments are illegal, period. A basement is variously defined, but what matters is how much of the living area is below grade, and whether or not there is a separate entry door to the basement itself. Among other things, such as GFI outlets. Again, ask someone at the building department.

If you put in an illegal basement apartment, when you go to sell, the building department may require you to pull out everything you put in to make it an illegal apartment (stove connection, toilet, etc). At a minimum--they may also fine you.

So If it is not legal, don't do it. It's not safe. Besides which, if, heaven forbid, you put a tenant in there and there is a fire, you will be in dire straits indeed. And your insurance won't help you and in fact may cancel your insurance on the spot. You would need a very, very good and very expensive lawyer to help you if that happened.

Otherwise, finishing off a basement is one of the smartest renovation moves you can make to increase the value of your home. Renting it out (legally of course) will have only a small impact on the market value one way or the other, I believe, unless it's really a two family home. This is because many people do not want a tenant situation anyway. So, your main investment benefit would be cash flow. You should have no trouble renting if the rent asked for is appropriate.

Karla Harby
Licensed Real Estate Salesperson
Rutenberg Realty
New York, NY
212-688-1000x146
kharby@crrnyc.com
1 vote Thank Flag Link Mon Jul 30, 2012
That is too difficult to answer without having more information about the house and neighborhood in question.
0 votes Thank Flag Link Sun Jul 29, 2012
Call in a few local agents who are willing to stop by for free and discuss it with you. They should be familiar with the risks vs rewards in your local market. If you gather three opinions or so you should have a pretty good handle on it. Good luck.
Tom Brady SFR, e-PRO, SRES, GREEN, BPOR
Licensed Real Estate Salesperson
Notary Public, Retired N.Y.P.D. Lt.
631-682-8660
Tom@BradyFamilyRealty.com
http://www.BradyFamilyRealty.com
"We treat you like family!"
Charles Rutenberg Realty, Inc.
255 Executive Drive - Suite 104
Plainview, New York 11803
0 votes Thank Flag Link Sun Jul 29, 2012
Check with your local town before considering renting; check for any permits, is it allowed, etc.
0 votes Thank Flag Link Sun Jul 29, 2012
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