3 unit building with 1400sqft basement. What to do with it?

Question

Hey everyone! I'm trying to figure out ways to monetize or at the very least, make my 1400sqft basement useful. The basement is at the bottom of a 3 unit building in Chicago that I'm in the process of closing on. It's unfinished and doesn't seem to have any flooding issues. It's pretty humid down there but nothing that a sump pump can't solve.

Has anyone else had an unfinished basement this size? What have you done with it?

Some of the ideas I've had:

- Turning it into a paid extra storage area for the tenants and other people who would be willing to pay to store their things down there.

- Converting it into a basement level apartment (I'm iffy on this as the basement height seems about 1 foot from being able to be a legal unit. But that's from my eye and not actual measurements)

- Finishing it and using it as a Airbnb rental space

Any other ideas? Or anyone have experience with the ones listed?

Vinay H. · Answer

If there is humidity, poor ventilation/lighting and no emergency egress (via door or large window), then forget turning this into livable space and focus on storage, although the humidity needs to be resolved (sump pump and/or dehumidifier).

Mike B. · Answer

Depending where the property is located it may be worth it to dig out the basement and duplex the first unit. Making it an illegal apartment is a risk. While many exist in Chicago, if the city finds out they'll make you demo the unit...setting fire to every dollar you put into it.

Syed Lateef · Answer

I agree it will be less desirable product on Airbnb but there is still a demand for it. SOME guests wont like it even if you disclose it.You will get some negative reviews and it will hurt your rankings that is correct.

But the goal is not to get the highest ranking. The goal is to make money.

Bob Floss II · Answer

@Byron W. I’ve personally handled lawsuits from the city on legalizing basements. I’ve won some and lost some. Everything @Vinay H. said was 100% on point. If you don’t have the ventilation, egress, and height, forget it.

I’ve seen some investors install a stairway from the first floor unit to make it larger and increase rents, but a project that big can be very expensive. I’d go with storage.

Travis Rasmussen · Answer

@Byron W.

As an Airbnb host, if it would be cramped and uncomfortable, I would actually discourage using it for Airbnb. Guests won't like it. Even if you were to disclose this,, you are going to have negative reviews and it will hurt your rankings. I would lean towards the storage route.

Alex Bekeza · Answer

Another reason why not to attempt to turn that basement into living space is that you will have a very hard time when you want to refinance/sell.  The lender/appraiser is not going to look at the potentially illegal living unit as going towards the property value.  Rather they will look at it as a huge cost to repair to bring back to code.

Bryce Lee · Answer

Would it be viable as a day use space? Say an art studio or Co working location?

Steve Babiak · Answer

If you are thinking of making this some sort of shared storage area for the tenants in the other units, you might want to reconsider.

The tenants will inevitably leave stuff where it is n't supposed to be. Even if you make locked storage areas, somebody will have something they'll keep outside their "locker". You might end up spending time managing this and the drama ("my stuff was stolen from my storage").

Now, if your plan is to rent the entire basement as one big storage area to just a single party, and there is an outside entrance so that party does not have to be living there - then maybe that could work.

Marc Winter · Answer

Well, there ya go--I agree with all the comments above--do NOT rent it out for living space.

Is there a separate entry from the outside?  That would be critical for any type of rental--MUST have a 2nd means of egress or face potential liability in case of bad stuff happening.

If you DO have exterior access, and you can get it property secured, maybe also add a wireless video camera.   Address solving the humidity problem: does it have a cement floor or dirt?  If dirt--you'll need to install vapor barrier (heavy plastic) and gravel over that, then possibly some type of flooring.

Is it a stone/rubble foundation?  Use solid core insulation board, about 2" thick on the walls.  Keep a circulating fan going at all times.  Dehumidifier is good if you have a place for the water to automatically discharge.  Have some heating installed (electric with diverting fan is fine) because it can get chilly in Chicago.

Install fluorescent/led lights (be sure this will be powered by the 'house' meter, so keep your expenses down).  In your lease, make sure tenants sign indemnification against mold, mildew or flood.

Have them name you as person of interest on their renter's insurance policy.  Make sure there is a clause it is for storage ONLY; no working, no sleeping, eating or conjugal visitations.

I'd look to rent it to a contractor, an artist or someone that needs large amounts of storage space.

3 unit building with 1400sqft basement. What to do with it?

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