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.

[Lucas Dalton]

Have you pulled any records for the listing/sale of properties comparable to yours both with and without finished basement apartments? That's what will tell you how much equity you could potentially build with the project. Maybe someone familiar with the Nashville market will chime in with specific advice, but I'd just start by pulling some comps and seeing if there's any evidence that the project would add value beyond its own cost within your particular area.