Appraised 3rd Bedroom? Rental Property Walkout Basement

[Nat Rojas]

Hi BP family!

Recently purchased our first rental home in Baltimore City, Maryland using Hard Money. We need to confirm whether we can turn the basement into a 3rd bedroom. The house is currently listed as 2 bed, 1 bath. If we can safely and under the proper rules/regulations turn the basement into a bedroom, then we can refinance with a higher ARV. If not, that's perfectly fine!

We have asked several people (Baltimore City, Contractors, RE Agents, etc.), but have no clear answer on whether our basement could qualify as a 3rd bedroom and the black and white to verify.

Based on the attempted drawing to scale of the basement, are we able to make the basement a 3rd bedroom?

If not, what modifications do we need to make to make it a 3rd bedroom?

We reviewed the international Property Maintenance Code (https://codes.iccsafe.org/content/IPMC2018/chapter-4-light-ventilation-and-occupancy-limitations). Chapter 4, we reviewed the sections below. However, we wanted to make sure our basement fit these requirements to make it a 3rd bedroom.

1.402.1 Habitable Spaces

2.403.1 Habitable Spaces

3.404.2 min room widths

4.404.3 Min ceiling heights

5.404.4.5 Other requirements

6.404.4 Bedroom and living room requirements

From the pictures

• the basement window is greater than 44inches from the ground on the inside. Window is currently not egress, but can certainly be replaced if needed.
• There is a walkout door right next to the window, so I’d imagine, that is what is necessary for an emergency.
• Front side of basement has another window (same size as back), and has a view to the underside of the porch. Side of porch has a wooden hinged door that allows someone to “crouch” for access. Not clean, but possible.
• Ceiling height is 7ft. Currently open wood, if we add a ceiling, then it will be lower than 7ft.

[Chris Mason]

Originally posted by @Nat Rojas:

If we can safely and under the proper rules/regulations turn the basement into a bedroom, then we can refinance with a higher ARV. If not, that's perfectly fine!

We have asked several people (Baltimore City, Contractors, RE Agents, etc.), but have no clear answer on whether our basement could qualify as a 3rd bedroom and the black and white to verify.

 There are always 3 numbers/facts/answers to any question.

- Real answer. It feels like a bedroom, it rents like a bedroom, it's a bedroom.

- Gov't answer. Supreme court says tomatoes are vegetables, not fruit. Doesn't matter what the scientists say, the government fact is that it's a veggie. 

- Industry specific answer, in this case the mortgage industry (since appraisals are done to FNMA standards). 

The mortgage answer is that if it is below grade, it will not be a bedroom. 

It will be a finished basement and compared to other properties that have finished basements. If finished basements add value in your specific market(1), then it will add value in the appraisal report.

(1) Think of an outdoor swimming pool in Arizona v Alaska, with that in mind you can't just say "oh a swimming pool adds $X in value" without knowing if we're in Alaska or Arizona... it would be a PITA and decrease value in Alaska!