I just purchased my first 3 bed 2 bath home with the intention of finishing out the walk out basement as a private fully furnished 2 bed 1 bath + full kitchen apartment. I am trying to determine if the numbers make sense to continue with this idea. I ran a few different scenarios into Craig Curelop's House Hacking Deal Analysis calculator but I'm looking for a bit more info than what that calculator is providing before continuing on.

When I purchased the home I had set aside $60,000 in cash to do the renovations. After getting a few more quotes my number was low and I am now looking at $80 - $100k in renovations. The research I have done makes me confident the rental can produce at least $25 -$30k in revenue each year. My questions are:

1. What is the most accurate way of determining the ARV of adding two bedrooms, a bathroom, and a kitchen? A big piece of this plan is doing a cash out refinance in a few years after the rental has been up and running for a bit but I'm not sure the best way to get an accurate ARV to understand how much equity I will have in the home once the renovations are complete.

2. Considering I may need to put $100k of cash into this does it still make sense to do this or would using that cash to purchase a separate rental property make more sense? I am leaning towards the house hack because although the upfront cash price is high the low risk, simplicity of managing a property I live in, and the ability to cash our refinance are big positives over just purchasing a separate rental.

3. What is the best way to pay for the renovations? Assuming $100k for the renovations I have a $40k gap to make up. The easiest option is to wait and save my own cash but that will take about a year. Would a renovation loan make sense in this scenario? Or some other way?

Asheville, North Carolina

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