Investment Property Basement RehabHomeowners and investors today usually want to maximize their living space options whether they live within the property or lease it out to tenants. Owners must first learn the best ways to make space additions to their properties which can either add or subtract property value.

Owners should seek out third party specialists who understand the requirements needed to modify or create brand new family rooms, kitchens, or bedrooms, garage conversions, basements, or livable attic space add-ons. Depending upon the home’s region, local building permits and inspections may be required first before any work starts.

More landlords want to maximize their monthly rental income these days by leasing out empty bedrooms in the home where they live, or are considering modifying garage, attic, and basement space on their property for higher rental income. A property owner who decides to rent their attic or basement space to tenants can get into serious legal trouble for not following the local building codes or being aware of the environmental and interior home health risks.

Basements – Digging Deeper for Profits

Basement Rehab ProfitsBasements are more common in colder regions where the home’s foundation needs to be below the frost line. In recent years, the construction trend for homeowners is to also build or add on a basement, a “man cave” sports and entertainment room, or an underground wine cellar in warmer states like California, Texas, and Florida. The increased demand from owners to dig deeper is partly related to smaller lot sizes to work with in more crowded metropolitan regions.  Instead of building outward, some owners are moving downward.

There are some areas which allow homeowners to add or modify basement space on their premises without first obtaining building permits and requesting building inspector walk-throughs. In other regions, the city or town may require a fire department certificate of occupancy form or a more detailed certificate of occupancy form from the planning and zoning department.

Most underground basement regions need access to plumbing and electrical systems just like the rest of the home. Basements are one of the most favored places for mold and pests in a home due to being some of the darkest and wettest areas. If mold grows too quickly in dark and damp basements due to insufficient insulation and poor construction quality, then it can make the basement and the rest of the home uninhabitable and at risk for demolition.

To learn the best ways to properly build or remodel a home’s basement, please visit this website for more details: https://www.basementguides.com/finishing/

Finished Basement Design Ideas

Some property owners see their basement as quiet office space, an extra guest room for visiting relatives or friends (or a “mother-in-law unit”), or as a family or entertainment room. There are modern-day “man cave” basements which have adjacent wine cellar rooms, 70-inch flat screen televisions, wet bars, video game areas, and other features that are popular with kids and adults, and are the most popular room in the house.

Image courtesy of: www.finishedbasement.com

Image courtesy of: www.finishedbasement.com

Basement design options can include French drains, a sump pump, and a back-up generator to deal with any potential flooding or drainage issues. Owners should make sure that there is enough headroom in the basement somewhere within the 8 to 10 foot plus height ranges. This is so that there is enough room for overhead lights that will really brighten up the room. Natural light options are also an exceptional design strategy if windows, skylights, or side exit door locations are available.

Owners are encouraged to keep their basement unit space as open as possible as opposed to chopped up with too many dividing walls. Flooring options like glue-down or “peel and stick” carpet tiles not made up of wool that don’t soak up much moisture can be great choices. Contractors and owners are advised to not seal off any existing underground mechanical systems, electrical circuit breakers, or existing plumbing lines which can later hinder or completely block repair work.

Environmental Risks

flooding-disaster-investingThe #1 most common natural disaster incident in the United States each year is typically related to flood damage. Per Floodsmart.gov, the average flood insurance claim between 2011 and 2015 was just over $46,000. Nationwide, the total number of flood insurance claims averaged more than $1.9 billion each year between 2006 and 2015.

Let’s review below the Top 10 states which had the most flood-related insurance claims as reported by the National Flood Insurance Program for 2015. Please note that basements are quite common in most of these states listed below.   

1. Texas – $520,336,507
2. South Carolina – $119,240,544
3. Kentucky –  $25,234,330
4. Florida –  $23,685,285
5. Oklahoma –  $23,350,831
6. Missouri –  $19,282,815
7. Louisiana –  $13,755,188
8. Massachusetts –    $9,736,052
9. Washington –    $8,712,977
10. Indiana –    $7,862,386


(*Source above: https://www.floodsmart.gov/floodsmart/pages/media_resources/stats.jsp  )

Rehabbing Can Add or Subtract Value

Rehabbing real estate investmentPositive building upgrades and additions can add tremendous value while negative building additions can lead to serious fines, lawsuits, foreclosure filings by unhappy mortgage lenders, and even the requested condemning and demolition of the property by the building code enforcement office if the owner did not follow the building guidelines.

Without the proper building permits, the additions may not be counted in the square footage estimate by an appraiser when the owner is ready to sell the building. A room addition which cost the owner $50,000 to build can add no value to the property if the appraiser doesn’t consider the extra 500 or 1,000 square feet of space to be “livable” space. The lack of permits for the additional non-permitted square feet can cause the homeowner to miss out on another $100,000 to $200,000+ in sales price revenues.

Where does water from floods, heavy rains, and mountain run-off usually end up on a property? Answer: The lowest portion of the home in the basement. As such, the basement should be the best built room in your home. A well-designed basement can help the owner end up with penthouse-like profits!!!

Your Comments: