Adding additional unit - how much value does it add? Ithaca, NY

[Hollis Malkowski]

@Madison Heck and I are currently closing on a 225K with two units - 5 bedrooms total. Our estimated rent for those two units is $4k total ($800 a bed). There is the potential to convert the basement into another unit - either 1-2 bedroom. How much will this basement unit increase the overall property value?

[Tim Burke]

The cost to add the additional unit may actually exceed the forced appreciation gain. This is especially true if inside the city of Ithaca - the city has very strict code enforcement, and lots of rules about who can and cannot do certain kinds of work. For example: you're not supposed to change a light switch or power outlet in the city without a permit and the work being done by a licensed electrician. 

Adding a new unit to an existing property would likely need to go through the city planning board and zoning board of appeals process, with an architect getting involved. They may require you to bring the rest of the property up to current code. Not saying you shouldn't explore this, just be aware the process may be long and expensive. Friends in Ithaca recently added an accessory dwelling unit when reconstructing the garage at their SFR in Ithaca and the process has taken well over a year navigating the city bureaucracy - with a couple of construction starts and stops because neighbors complained (spuriously) to the code office.