In-law unit in walkout basement

[Chris May]

I'm in contract for a house in Oakland that we think is a great candidate for house hacking. 

The house is on a slope and there is a walkout basement that extends 15 ft back into the hill/under the house. Ceiling height varies from 7.5 to 8 feet. Where the finished part ends there is a short retaining wall about 2.5 feet tall

I've gotten a few very informal estimates for extending the basement back another 5 feet and putting in a small 1 bedroom in-law unit. The estimates, one from a guy we've used before and another local contractor, are in the 200-300k range.

Those estimates sound wildly inflated to me based on quite a bit of research I've done online. Am I missing something? Is the cost of business in the Bay Area almost 3 times what it is elsewhere? There's already plumbing and sewer in the basement so I'm confused how this cost is so high.

Any thoughts on how much just the structural/foundation work should cost? How about if I paid to have everything roughed in and I finished it myself?

This is the best house hacking candidate we've found and I'd really like it to work  200k is a non-starter though.

[Amit M.]

If it's on a slope, and you have to redo the foundation, as well as add structural elements, then that alone can be over 100k just to have a box. But finishing the interior should be doable in the 50-80k range. I'm just guesstimating, having not seen it though. Get more bids from contractors, but yeah, most are a total rip off now as they have plenty of work. Just keep calling available contractors out there, as many as you can, until someone sounds reasonable. 

Also, make sure you can make it a legal u it, so you get the value of the added square feet. 

Also, does adding a second unit put it under rent control?  Look into that. It does so in the city. Lots to consider here. Usually in higher end neighborhoods it doesn't pay to add a second unit. Most people add the footage to the main house.