It depends…. That is the answer to is basement finishing a good investment. It’s the answer everybody hates to hear. Let us provide some insight…
The answer is YES, basement finishing is a good investment if:
- You need the additional space in your home and finishing your basement would prevent you from buying a new home.
- You are able to complete some of the work yourself. (Check out our DIY Partnership option)
- You are going to be in your home for the foreseeable future. If so, you should not be concerned about the ROI and should focus on what you need or would enjoy.
The answer is NO, basement finishing is not a good investment if:
- You are only looking to add the finished space to increase your home value, potentially for resale.
Let’s dive in a little deeper on things to consider on the investment of finishing your basement.
What is the ROI on a basement renovation?
According to Remodeling, the folks that conduct Cost Vs Value reports on a yearly basis, you can expect to get a return of 70-80% of your basement investment. Put another way, if you spend $100,000 to finish your basement you could expect to receive 70-80% of that, or $70,000-$80,000, when you sell your home.
Therefore, if you are considering finishing your basement to only turn around and sell your home it does not make sense.
Unless…
You are able to do some of the work yourself.
Given that a typical contractor needs to have a markup of at least 50%, if you can do some of the work yourself, you would be able to reduce the overall cost and potentially get 100% or more of the investment back.
On the other hand…
If you are planning to live in the home for the foreseeable future or even the next few years it may make sense to finish your basement now.
The question you must ask yourself is if the potential negative return of that 20-30% is worth it to potentially double your finished square footage for you to enjoy over the coming years.
What basement features to include to get the highest ROI?
In many cases a basement finish will nearly double the size of your existing home, if you have a ranch layout. Therefore, there are many items you can include in your basement finish.
This article is about ROI on basement finishes and some items will serve you better than others.
To get the most bang for your buck consider having the following in your basement:
- Basic bathroom: LVP floors, vanity with quartz countertops, fiberglass tub / shower
- Living area: Carpet on floors
- Bedroom: Closet and carpet on floors
Now, the items listed below are nice to haves, but the value returned is lower than 70%:
Wet bar:
Cabinets, quartz countertops, plumbing, OH MY…. These will quickly increase your overall price tag. Do you really have that many friends that come over?
- If you are going to do it opt for a 8’ section of cabinets along a wall with a sink and mini fridge.
- Again, if you are going to be in your home for the foreseeable future you should create what you will enjoy and not be as concerned with the ROI. In this case, if you want an amazing sports bar in your basement we say GO FOR IT.
Home Theater:
- We won’t belabor it…. It is similar to the wet bar above. They are expensive and lose value quickly in terms of the electronics installed in home theaters. But if you are going to be in your house for a while and would enjoy this, do it.
Home Gym:
- WORTH EVERY PENNY…. Time is our most valuable asset. Not having to drive to and from the gym saves you 1 hour.
- You are more likely to exercise when you have easy access with a home gym.
- The build out of this is no more expensive than a typical room in your basement. The added expense comes with the exercise equipment.
Home Office:
- Again, worth every penny in our opinion. Easily converted into a bedroom down the road.
- The expense will come from built in cabinetry if you would want it. Otherwise, a typical desk could be placed in the space to give you a dedicated office space.
FAQ:
- Does basement finishing increase taxes?
- Yes – once your basement is finished your property value will increase thus increasing your property taxes.
- Does basement finishing add value to my home?
- Yes, finishing your basement will add value to your home. However, as we have discussed, it may not add as much value to your home as it costs to complete.
- How much will it cost to finish my basement?
- The cost to finish your basement varies upon location and basement features. You can use our basement calculator to get an instant estimate for what to expect in Des Moines, IA.
