The ceiling height nearly killed a $34k basement conversion

Bought a 1950s ranch for $265k with an FHA loan, 3.5 percent down. It had a walkout basement with its own door to the side yard, which is why I bought it instead of the cleaner house two streets over. Payment with taxes and insurance is $2,050.

I came from the trades so I did demo, framing, and all the finish work myself, and I hired out the electrical and the plumbing tie-in because I'm not licensed for either and my jurisdiction wouldn't have passed my work anyway. Permitted the whole thing. Rules on what makes a basement unit legal are local, so mine may say nothing about yours, and the building department was the first call I made rather than the last.

What almost killed it: ceiling height. The inspector wanted seven feet finished in the habitable rooms and I had 7 feet 1 inch to the bottom of the joists in most of it and 6 feet 8 inches under a duct run through the middle of the future bedroom. Rerouting that duct was $2,800 I hadn't planned and two weeks of nothing else happening. The egress window in the bedroom was another $4,100 with the cut and the well.

All in, $34,000 in materials and subs. My labor isn't in that number. It rents at $1,200 unfurnished, one bedroom, separate entrance, its own electric meter because the electrician talked me into the subpanel and second meter while the walls were open. Best $1,900 I spent.

So I'm at $850 a month for housing on a house I own, and the tenant is paying down my loan. I'd keep the permits and the second meter. Next time I measure to the bottom of every duct before I write the offer, not after.

5 replies

1nicole_adeyemiPassivePRO5

The second meter is the part I'd push on. It solved your utility problem but it also made the unit look more like a separate dwelling to the county. Did your assessment change after the permit closed out? In my county a permitted basement unit shows up on the record and the assessor eventually notices, and that's a real line in the monthly number.

2mikeoconnell7SP2APRO6

$34k for a permitted one bedroom that rents at $1,200 is a 42 percent annual return on that spend before any expenses, which is why this shape keeps coming up. The part people skim past is that your own labor is missing from the number, and hiring out the demo and finish would have added what, fifteen or twenty thousand?

1tashaford30PB2APRO7

This is close to the plan I'm building toward, so the specific question: how long from closing to the first rent check? I need to know how many months of the full payment I'm carrying alone.

3priya_n21PO1C

What happens if the tenant leaves and it sits two months? You're at $2,050 again on a house you bought assuming $850. I'm not saying don't, I'm asking what your cushion looked like while you were spending $34k.

The ceiling height nearly killed a $34k basement conversion

5 replies