First Time Home Buyer Looking at Basement Rental Potential

[Justin L.]

Hello BP,

My Fiancé and I are looking to purchase our first home and are trying to analyze the potential for converting the basement into a studio apartment rental. We do not have any Real Estate experience so we could use some guidance on basic items to look for and maybe a process to run the numbers and determine if the property we have in mind is a good deal.  

We have a fixed budget of $500K and have found a property in the Arlington, VA area for just under $400K.

It is in a decent neighborhood of the Arlington area, and we are expecting to spend at least $100K on the renovation (including an addition plus accounting for major repairs). I don't want to overspend on the property/renovation and not be able to get a good return if we sell the property in 2 to 5 years or more. 

Can anyone suggest a few resources that I could use to help analyze this house we have in mind? We have walked the property with a Real Estate agent and a contractor whom have a very good reputation with their respective companies, but I trust numbers overall. Any suggestions are welcome. Thank you in advance!

Best,

Justin