“Never depend on a single income. Make investment to create a second source.” – Warren Buffet
When one of the world’s wealthiest people advises you on managing your financial situation, you need to pay attention. If you are a homeowner who is confused about creating a second source of income, here’s a secret for you – you are sitting on a rental goldmine. And, it is your basement.
You can convert an idle basement space into an ideal basement apartment. It will allow you to make a profitable use of the space and help you to lead a comfortable life. But, remember that renting out the basement is not as easy as selling your old stuff in a garage sale. In order to ensure an ideal source of income and minimum tenant problems, you have to take care of multiple aspects related to converting a basement into a rental property.
How to convert an Idle Basement into a Rental Property?
· The Legal Aspect
Before you hire a basement renovation contractor and begin the process of transforming the basement into a rental property, you must sort out the legal issues. Check the by-laws in your area and make sure that you have followed the rules established by the local government. If you ignore the legal factors, you will have to face a time-consuming and expensive building inspection in the future.
In order to register your basement apartment with the local government, you will have to comply with the city’s building code, fire code and electrical safety requirements.
· The Financial Aspect
If you fail to plan, you plan to fail.
As your motive behind the basement apartment is to earn additional income, you must create a plan to ensure that the return on investment is high. If you fail to consider the financial aspect of the basement apartment, it will prevent you from creating an ideal source of income.
It is advisable to recover the investment amount in two years. So, if you have decided to spend $25,000 on the renovation project, you must ensure that you earn at least $1000 per month in the form of rental income.
· The Aspect of Layout
Do you have enough space in the basement to convert it into a rental property? If the ceiling is not high, you will have to spend money on underpinning the basement. It will help you to lower the floor of the basement and solve your problem. But, it can increase the cost of renovation. So, consider it carefully before making a decision.
If you want to build a basement apartment successfully, you must provide a livable condition to the tenants. So, discuss the following things with the basement renovation contractor:
1. Grounded electrical plugs
2. Smoke alarms
3. Proper parking facilities
4. Operational plumbing system
5. Separate exits
6. Multiple windows
7. Efficient lighting
8. Entry of natural light
9. Window treatments
10. Adequate storage space, etc.
· The Aspect of Interior Decoration
Remember that you are not going to live in the basement. Instead, a tenant will be using it. So, when it comes to interior decoration, it is to better make neutral choices. Do not choose a bright and dark color for the walls. Also, choose simple yet useful furniture for the basement apartment. Opt for a neutral color scheme. You can also install removable wallpapers. Alternatively, you can allow the tenant to paint the walls according to his choice.
Also, if you want to list your property as a furnished space, you will have to spend money on:
4. Washer and dryer
5. Couches and Sofas
7. Dresser, etc.
Once you consider all the four aspects of building a basement apartment, permit the basement renovation contractor to begin the renovation work. During the renovation work, be present for the contractor so that he can obtain your views on all major decisions. Also, it will ensure that you do not spend a large amount of money on rework.