How much should I renovate while house hacking?

[Lorenzo Dudley]

My wife and I purchased our first home and we are planning on house hacking it is a 5 bed room 2 bath we plan on renting out the top 3 bed rooms and live in the basement the upstairs is rent ready but my wife and I are planning on renovating the basement while we live there and the most I have done in my life is paint a wall. I hear all the time don’t over renovate because you won’t get your money back out. But I want to take this opportunity to learn. Am I waisting money or is the knowledge worth it?

[Brian Briscoe]

@Lorenzo Dudley  

Experience helps... but you want to avoid painful experience.

Before renovating, I'd suggest you look at the market comparables.  If everything in your area has laminate countertops, linoleum floors, and white appliances, then granite, hardwood, and stainless steel would be over-renovating.  Every market is different, but usually, making it nicer-than-average-but-not-too-nice is where you want to aim.

Look at sales and rental prices of homes in the area and focus on the ones that have renovations similar to what you're planning.  That should give you an idea of what the potential upside will be after you renovate.  If you're planning on selling the property soon, it'll be easy to get a realtor to advise you on what renovations attract buyers and which renovations bring higher sale prices.  Once you have a good idea of what features bring in higher rents and higher offers, then you can start pricing those particular renovations and determine whether the investment is worth the cost.