Add Rental to Primary Residence as 1st "Property"?

[Adam Knickelbein]

Hi - this is my first post on BiggerPockets. Nice to meet everyone.

We live in a 3 bed, 1 bath house with an unfinished basement. The finished upstairs is 960 sf, the basement is ~900 sf. We are considering finishing the basement as two units. Approximately 300 sf as family room, half-bath, and laundry/storage for us to keep. The other 600 sf would be finished as a 1 bed, 1 bath rental with its own exterior entrance. 

My neighbor across the street has exactly the same situation at her house (600sf basement rental, 1 bed, 1 bath) and they get $1400/mo rent. All in cost to do the work is likely $75,000. We already have access to a HELOC up to $150k at 6.15% variable, but we carry a balance (that we're paying down) of $30k. We have 19 more years to pay the HELOC back. If I finance through our HELOC, and amortize over 18 years, I calculate monthly cash flow at $580. If we pour all the money into paying off the loan, the payback is about 6.5 years.

I have zero experience as a landlord. I have a 4 yo and a 7 yo that run around upstairs. I'm concerned about bringing someone else into our home, even though they'll be totally separate.

Am I crazy to have my first rental within my own primary residence? I have no idea whether being a landlord is a good fit for me, nor am I sure how we'll like "living" with someone else. Should I instead eat the cost to finish the whole basement as one unit for our family, and look elsewhere for my first property?

Thanks for your feedback!

Adam