Basement finishing has become one of the most popular home renovation projects because of its excellent return on investment (ROI). When homeowners ask “does a finished basement add value?,” research shows that renovating a basement has an ROI of about 70%. For every $1,000 that you spend renovating your basement, you can expect to get $700 in value in return. This is an incredible return on your investment, and much higher than many other home renovation projects.
As a result, many homeowners across Ontario have chosen to remodel their basements to increase the value of their home, and in the process have created more usable living space. Knowing the factors that impact remodeling costs has helped many people maximize their renovations.
Factors impacting remodeling cost
In general, the average cost to finish a basement can be anywhere from $10,000 to $100,000+. How much it will cost depends on several different factors:
Moisture is one of the biggest problems unfinished basements face. Mould, humidity, odour, foundation cracks and foundation shifting are all caused by basement moisture. If the water issue and damage are not fixed before the basement remodel, it will turn into a far more expensive problem down the road.
The extent of the moisture damage will determine how much work needs to be done to repair your basement.
Every municipality has building code regulations that govern how basements are finished. It’s important to know what these regulations are for your municipality so all your renovation work done is in compliance with the rules. The regulations for the egress and stairs tend to be the most expensive.
Your basement needs at least one door or window that can be used as an exit or entrance in the case of an emergency. The size and location of this access point must meet the standard. Installing an egress window can cost anywhere from about $2,500-$5,400. A basement walkout door costs between $2,500 and $10,000 or more.
If necessary, existing stairs will need to be upgraded to include handrails and/or a landing. The upgrade generally costs $920 to $3,000 or more.
How you plan to use your basement will have a significant impact on the cost. Some amenities are more expensive than others. If you plan to use your basement as a game room, you may not need to install any built-in features.
On the other hand, converting your basement into a basement apartment will require the addition of a bathroom, kitchen and possibly a laundry area. Adding a bathroom costs about $15,000, and a kitchenette can add an additional $45,600 to your reno cost.
Materials and professional designs
High-end materials and luxury finishes look great but are expensive. There are more affordable options that can provide a similar look at a fraction of the cost. Where you live will also impact the cost.
If you live in a remote area, it will cost more to have the materials delivered to your home and this will be reflected in the cost.
Variables impacting ROI
Does a finished basement add value? Definitely. How useful potential buyers find your basement will impact your ROI. Some popular basement ideas include a home office, family room, basement apartment, entertainment room and kids playroom. If you are planning to put your house on the market soon, going with one of these renovation ideas could result in a significant increase in your asking price. A less popular basement idea may not be as valuable to buyers.
Real estate market
Where you live is a major factor in your basement’s ROI because it establishes the value of your home. And how much your home is worth in a particular area influences the value a finished basement in that area will have.
Living in a place where many homes have finished basements makes it competitive, so renovating your basement will add greater value to a home in that particular area and increase your ROI.
The materials you use in finishing your basement are important and will impact your ROI. Luxury finishes will cost you more money, however, high-end materials do not necessarily mean a higher ROI. In some cases, you may even see it drop below 70%.
This is because luxury finishes are subject to personal taste. Cheap materials, on the other hand, decrease your ROI. To get the best ROI for your basement remodel, invest in quality materials that are durable and easy to maintain.
How you design and use your basement space is entirely up to you. But if you plan to sell your home soon, keep in mind that a potential buyer may have a different need for your basement space.
Designing a basement with an open space concept will make it more versatile and desirable to potential buyers. And if your basement allows plenty of natural light in, that will also score high with potential buyers.
How much does a finished basement add to appraisals?
How much value your finished basement will add to your home will be based on the assessment of an appraiser. The number of doors and windows in your basement will play a role and the square footage of your basement compared to the rest of the home will also be considered. Some appraisers will determine the value of the renovation based on the total living area of your home, while others may exclude the basement space. Be sure to ask your appraiser how they calculated the value so you can ensure no important details have been left out.
As a rule, below-grade renovations yield a smaller ROI than above-grade remodels. Some factors that will influence the appraisal include how deep your basement is below grade, and whether it is competitive based on the local market value of your home.
Ready for your basement remodeling?
After learning about how much value does a finished basement add, Moose Basements can help you explore different basement ideas to get the most value from your finished basement. We’ll assess your basement and work with you to maximize your basement space and turn it into a worthwhile investment.
Contact us today to get the most value out of your basement!