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:
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.
Basement condition
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.
Meeting Building Codes and Safety Standards
It is crucial that when you finish your basement you make sure to meet all building codes and safety standards. When determining the answer to the question “Does a finished basement add value?”, the cost of complying with building guidelines is another major factor to consider. For instance, you may need to add an egress, add or refinish the stairs.
An egress is an access opening and according to the International Residential Code, all finished basements are required to have at least one, either a window or door, so that during an emergency you can have both an entrance for first responders and an exit for yourself. This should cost around $3,000 to $7,000 to install.
As well, your stairs may not be right for a finished space and will need to be upgraded to fit within the code, such as widening the steps or adding handrails and/or a lannding, which would cost approximately $1,000 to $3,000.
Room amenities
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.
Aesthetic and Lifestyle Benefits
Finishing your basement is not just for potential buyers and the future owners of your house; it is first and foremost for you and your family. How much value a finished basement adds is not simply monetary. Rather, the emotional value added by the aesthetic and lifestyle changes a finished basement brings can be considered part of your return on investment.
In creating a finished basement, take into account what you want to use the space for in order to enrich your lives while you still live in your house. Incorporate your own personal touches into the aesthetic and accommodate for your own lifestyle and needs. This way you can start to enjoy your basement and spend more time in it.
Factors that Impact Value of Finished Basement
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.
Location
Where you’re located is a major consideration in regard to whether more value will be added to your home if your basement is finished. If finished basements are a norm in your area, then you will see a higher return on investment because buyers will expect one and avoid houses without one.
If finished basements in your area are rare, but still desired, you will also see the value of your house increase.
Materials
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.
Quality of Work
The higher the quality of work and materials used to finish your basement, the higher the value attributed to your home.
Although, this can depend on the area you live in as the use of high quality materials in a less expensive area may not see as large a return on investment than using those same materials in a more expensive area.
Potential
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.
Basement Layout
The layout of your finished basement will affect its appeal to buyers and thus its value. Of course, the desired layout of a basement changes depending on the buyer, but the majority tend to prefer open entertainment spaces.
So, if you choose to make your basement an open entertainment space, this will add more value to your home, whereas if you add walls in the basement for individual rooms, you’ll most likely have a lower return on investment.
Type of Basement
The type of basement you have will also play a part in the added value to your home.
For example, walk out basements are typically the most desirable option to buyers, so you will see a higher increase in home value if your finished basement is a walk out instead of a standard basement.
Does Finishing a Basement Add Value? Different Types Can Affect ROI
To answer this question of “Does finishing a basement add value?,” let’s dive deeper into the different types of basements you can have and how they can affect your return on investment:
- Walk Out Basement — As the name suggests, a walk out basement contains a way to leave the house from the basement itself, with a door that opens directly into the yard. This type of finished basement generally leads to a high return as it is the most desired due to its convenience.
- Standard Basement — A standard basement is mostly underground and includes a staircase either inside or outside that leads to the ground or yard level. Finishing a standard basement will provide you with a mid-range return on investment, lower than what you would get for a walk out basement.
- Daylight Basement — A daylight basement contains at least one full size window, allowing for more natural light and improving ventilation. Because of the added bonus of natural light, this finished basement will provide you with a higher return on investment, similar to that of a walk out basement.
- Legal Basement — A legal basement is an apartment space that can be rented out. Having a legal basement means meeting specific guidelines such as having a separate entrance, an additional parking space, separate utilities, and enhanced fire safety measures among other requirements outlined by the Ontario Building Code. Since you can rent out this basement, which becomes an additional source of income, it will provide the highest return on investment compared to the other types.
So, Should You Finish Your Basement?
How much value does a finished basement add in Ontario? According to the NAR/NARI study, finishing a basement is ranked as a top-four interior remodel with an estimated ROI of 86%. Of course, the value itself is dependent on a wide range of factors from location, quality of work, basement layout, and type of basement to meeting building codes and safety requirements. Don’t forget the aesthetic and lifestyle benefits either, which add emotional value instead of monetary value for the enjoyment it brings you and your family. Ultimately, you should finish your basement as it’ll add a great deal of value to your home, no matter what you do with it.
At Moose Basements, we can help you finish your basement, getting the most value out of it and turning it into a rewarding investment. Contact us today for a free consultation!
Contact us today to get the most value out of your basement!
