Does Adding a Bedroom in the Basement Add Value?

Short of building a home addition, your basement is the “final frontier” when it comes to adding living space to your home. That begs the question: Does adding a bedroom in the basement add value? The short answer is: probably. Adding a basement bedroom should fetch a 70% return on investment (ROI), but there are a few important things to consider first. Let’s explore basement bedroom ROI and how to figure out if this project is worthwhile.

Factors That Influence Basement Bedroom Value

There are several key factors you’ll want to think about to get an accurate estimate for how much value you’ll add to your home when installing a bedroom in the basement.

Other Additions

Finishing a basement fetches an average ROI of 70%, but the actual return you’ll see will vary widely based on how you set up the space. Adding a kitchenette, a bathroom, and at least one bedroom, and legalizing the space will boost value far more than just installing a bedroom.

A rentable space provides a much higher potential for ROI, so if you’re adding a bedroom with the intention of finishing the rest of the basement and renting it out, your long-term ROI will almost certainly be above 100%.

Current Basement Condition

Adding a bedroom in a finished basement will cost far less than converting an unfinished basement to living space, as you’ll just need to create wall partitions and install a door. Adding a bedroom to an unfinished basement will require you to install insulation, wall framing, and flooring, and you’ll at least need to tie in the space to your existing heating system to make it livable.

Starting with an unfinished basement means adding a bedroom will cost much more, and the higher costs will lower the ROI.

Legality and Safety

Your basement bedroom won’t be considered safe or legal unless you ensure you have the appropriate points of egress, which could mean installing an exterior entrance and window wells. These projects can add tens of thousands to your costs, so you’ll see a much lower ROI. If you start with a legally finished basement, your ROI could be well over 100%.

Rentability

Buyers looking at your home will either value a basement bedroom based on how much utility it adds for them and their families or on how easy it would be to rent the space. Finishing your basement legally and adding a kitchenette and a bathroom will mean your home is far more valuable to buyers looking to rent out the space. The actual ROI will depend on the buyer and the rental market in your area. If rentals are popular in your area, it may be time to finish your basement if you’re looking to boost value.

DIY vs. Hiring a Pro

Unlike adding a basement kitchen or bathroom, installing a bedroom in the basement is relatively easy to DIY. Provided you have the appropriate windows and heating system integration to make it legal, you can do the rest of the work yourself with some DIY experience, including framing out the walls, installing flooring, hanging drywall, and painting. You’ll need permits to make the conversion legal, but you can tackle all of the actual work yourself.

Installing a basement bedroom in a legalized space will cost an average of $3,000 if you have a pro who finishes basements do the work, and you’ll pay closer to $1,000 to do it yourself, depending on the size of the bedroom. Your ROI will, therefore, be higher if you forgo hiring a pro.

Construction and Materials

The quality of the materials you choose will play an important role in the cost and the ROI. Going with affordable flooring options like laminate that costs between $3 and $13 per square foot will lead to lower costs and a higher ROI than installing hardwood flooring, stone, or tile that can cost two to three times as much. Light fixtures and other finishes will also determine your upfront cost and the return you’ll see.

How to Estimate the Added Value of a Basement Bedroom

Estimating how much value a basement bedroom adds can be tricky, but there are a few things you can do to help figure out your ROI.

• Get accurate estimates for the work required. Start by speaking with a basement finishing company in your area to see what the conversion will cost.

• Compare to property values in your area. Check property values in your area based on bedroom count. Gauge the difference an extra bedroom will make in your home.

• Consider monthly rental potential. If you’re planning on renting your basement space, look at local rental values to see how much you could earn per month. This can allow you to make your money back quickly.

• Speak with a local real estate agent. When in doubt, speak with a local real estate agent about the value the room will add and how much you could expect in monthly rent to offset the cost.

Cost to Install a Basement Bedroom

Finishing a basement costs an average of $32,000, and most homeowners pay between $15,000 and $75,000 depending on the size of the basement, the quality of materials, and the condition the space is currently in. In a basement that’s already finished, installing a bedroom will cost an average of $3,000 if you hire a pro.

Is Adding a Basement Bedroom Worth It?

Adding a bedroom could be worthwhile if you need some extra space for your family, but make sure your basement is equipped with the appropriate points of egress to keep everyone safe. Installing a basement bedroom is far more affordable than the cost of building a home addition, so for the sake of utility alone, installing a basement bedroom is worth it.

If you plan on renting your basement, you’ll likely recuperate the costs and then some through the rental income, so, again, it’s probably worthwhile.