Adding a separate entrance to a basement on a paired home

[Gustavo Lotuffo]

Need some help here... I currently own a brand new paired home (just one side) in the city of Denver, CO. The house currently has an unfinished basement that is way too big for my family needs. After listening to BP podcasts and such I am trying to decrease my largest monthly expense so was curious to see if its legal to create a separate entrance for the basement and converted into a small 1 bed apartment that I could rent to help offset the mortgage payment in the house. I am not sure where to start or if I even have to ask the city for a permit to do that, I also know that we have an HOA governing the commons areas around the neighborhood. Does anyone has any experience doing that in the past? Also curious from a RE perspective, not sure if this would affect the property from a resale perspective. I would personally love a house that has some sort of asset generator income but maybe I am a weirdo. I know those house generally cost more but I have only see that in single family homes. Any comments would be appreciate it!