Converting basement to a separate rental apartment

[Cassandra Devine]

I am under offer on a house built on a slope that already has an unpermitted 800 sqf walk out basement apartment and I am trying to decide if it's worth the money and time of getting the basement apartment remodeled and properly permitted as an ADU. I am concerned the cost of remodeling may be expensive because the existing ceiling height is only 6.5 feet so we would need to lower the floor by at least a foot. Plumbing is already roughed in but there will be a lot of structural work needed to lower the floor and redo the kitchen and bathroom. Can anyone who has done a basement apartment conversion including lowering the floor tell me how much that cost you to do?

The house is in a desirable vacation area and I am planning to rent the main house out on Airbnb. If we remodel the basement we would rent it out as a separate Airbnb. I am trying to work out if we would get complaints from the people renting out the main house if there are also separate guests in the basement. The two rentals would have their own outdoor spaces and separate entrances, but one is directly above the other, so I have concerns about privacy.

I think it would only be worth it if the basement apartment can be added to the square footage of the house because then it would add equity which we could use to do a HELOC to recoup the cost of the remodeling work. Does anyone know how a walkout basement apartment would be appraised by a lender? If the county permits the work as an ADU and adds this to the overall square footage of the house for tax purposes, would the appraiser count it the same as the main floor square footage?