Renting Out My Basement

[Marc Yu]

I've got 3 other rental properties (all of them cash flowing positively), but the 4th property I just bought, the one I'm living in, has a 1,300 sf partially finished basement (all framing is up and electrical is already installed). I can finish it for about $35k (HVAC, plumbing, drywall, ceiling, flooring, appliances, finishes, etc.), and I can probably rent it out for about $1,800 in my area. I'm taking a HELOC against one of my existing properties, which I currently own free and clear, to finish the basement. Hoping in 2 months the basement will be rented out. This will cost me about $400 a month on a 20 year loan (taxes and insurance included in monthly HELOC payment).

So, is this a good idea?  My wife thinks it's a horrible idea since that will put us in further debt, but it's cash flowing.