Decision - Finish basement or convert to duplex?

[David Hagen]

Good morning, BP!

I've got an offer in on a property that needs about 10-15k of work on the main living space, but the basement is partially finished with electrical wired and wall studs already in place for a 4-room layout.  The basement already has a full bathroom as  well.

The interesting part is that the basement's only entrance is from the garage.  This led me to the idea of expanding the property to a duplex, but I'd have to add in a kitchen, separate furnace, and separate water heater on top of making sure zoning allows for a duplex.

I could finish the basement to give the house 4 bedrooms and rent it at $1200-1300, or I could convert to a duplex and rent two units for a total cash flow of around $1600-1700, however having never done a rehab (much less an expansion to a duplex), I'm concerned about the scope of work necessary.

Has anyone seen success in this area with some advice to share? 

Thank you in advance!

[Nathan Gesner]

Before spending another minute of energy on it, check with zoning. There's no sense wasting your time crunching numbers or creating design if zoning won't even allow it.

The return is better with two units. However, you have to consider the downside of having one unit below another. This turns a lot of renters off and can make it harder to find tenants. You may have tenants complaining about each other and causing you headaches.

I think it's worth it but go in with eyes wide open.