We recently acquired a new property. The house is currently listed as a 3 bedroom 2 bath where the second bathroom is in an unfinished basement. The bathroom in the basement is poorly configured. For example, the ceiling is low, the vent pipe is next to the toilet, and the entrance is not on the same axis to allow a door to be installed (it's hard to describe). Our plan is to redo the bathroom and convert it into a half-bath. Basically, we plan to turn the toilet toward a more functional direction. This will allow us to drywall up the vent pipe. We also plan to remove the standing shower stall to allow for a better entrance. This would allow us to save on rehab costs because we would avoid any additional plumbing expenses to relocate the shower stall.

One of my concerns was how would a now half-bath in the basement affect our "post-rehab" appraisal. Would we get a lower appraisal because the bathroom is no longer a full-bath? Or would our appraisal potentially go up because it is more functional now? A friend of mine suggested not to put too much effort into the basement. He said that the return we would get for any rehab done in the basement would be $0.25 to each $1.00.

I was curious if anyone had any opinions on this. Would others agree with my friend's assessment?

Thanks!