How much equity can you build by creating a basement apartment?

[Kevin James]

I’m considering 2 strategies. Would either of them build enough equity to be worth it? (I’m just interested in understanding the increased equity potential, not the rental/Airbnb return).

1. 1. I understand that generally finishing a basement will only provide 70% ROI but what if it's converted to a full apartment? I'm in Nashville which has lots of hills and you can find many SFHs with walk-out basements, egress, and a good amount of natural light. I've seen other houses with this set up, and the basement apartments look nice and don't have a basement feel.
2. 2. Find a home that already has a finished basement and then add a kitchen and bathroom to convert it into a studio.

Ideally, I’d like to do a cash-out refinance a year or two down the road but if either of these doesn’t create more value than what I’m putting into it, I may consider another strategy.