Convert a basement into a separate rental unit?

[Jonathan Taylor Smith]

How easy / costly / practical / legal is it to convert an unfinished basement (775 sf) into a 1 or 2 br unit that can be rented separately from the two floors of the townhouse above? There is an HOA with restrictive covenants - so I will check that, as well as, any city (Durham, NC) or zoning restrictions... but I generally wonder if making the basement into a separate rent-able unit would work and be cost effective versus just including the unfinished basement space for storage to the townhouse renter. Seeking a way for the space to not go to waste and make it a more profitable property. Rent for the townhouse should be $1400 (even without the basement) and would like to be able to rent the finished basement unit separately for at least $600.