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.

[Timothy McKinney]

Originally posted by @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.

 Hi Jonathan, I am a contractor/investor in the area. Construction wise, this is very doable providing you have proper fire egress. I would also say that from an investment standpoint, this would work nicely. You would definitely get more rental from two units than including the basement with the townhouse. But be sure to check city zoning to allow for multiunits.

Cost of the upfit would likely be minimal since you already have a structure and are only filling in the interior space.