Start with a reputable contractor. You might want to interview a couple. Pick their brains. They will know what you can and can't do both legally within he town and physically due to any restrictions the home presents.
Sounds like you've got plumbing nearby so that's a good start.
Good luck"!... more
99% of the time, reducing the number of bedrooms lowers the value of a house. Your case may be an exception however. Your rooms sound very small, and this may turn buyers off if they can't fit a queen bed in them and still be able to walk around it. Having a really nice 2 bedroom home may be preferred to having an un-useable 3 bedroom.
I'm tempted to say move ahead with your idea, but make sure the results really say "wow"....get professional advice and use high-end materials.... more
As opposed to being unfinished or a house not having a basement, of course!....if you do an over-the -top remodel in the basement - or any other room for that matter - you may not recoup your costs. If you are going to spend money, FIRST do the kitchen appliances....... more