Is a basement apartment conversion profitable?

[Christina V.]

Hello there! I have saved up about 20k to get started in real estate investing. I was originally looking for duplexes but they are VERY hard to come buy in my market. I live in southeast WA. I now have set my sights on SFHs that have basement living spaces. I have found one place with 3br/1bath upstairs and 2bedrooms in the basement. It is going for about $170k. Most duplexes in my area are going for over 200k. My thought is that I can convert the basement into an apt--add bathroom and small kitchen and bring in two rental incomes (eventually). I would live in one to start out. Based on the market and the neighborhood --the top could rent for about $1100 and the bottom would be $700+. Is this worthwhile? What other things should I take into considerations? The city I live in allows basement apts as "accessory apts." Has anyone have success with basement rentals? Thank you!

[Bill S.]

@Christina V. so other considerations.

1) Building code and egress for the basement unit.

2) Utilities, how will they be paid. 

3) Zoning "allows" but what limitations. Here accessory dwelling units (ADUs) must have at least one of the units owner occupied. This makes the resale value much less as it can't be purchased by an investor. 

4) I hate owning up/down duplexes. Sound is a huge issue. Utilities not split out is a huge issue. Resale is an issue as well. They are major headache compared to side by side and as such aren't really in demand. 

Some thoughts. Do a house hack and rent out the bedrooms in the basement. You will likely get as much rent and have no capital outlay. Another option is to rent the property by the room. Again same or more rent and lower cost.