Just purchased a 3 bedroom with a rather large basement. 3 bedroom would catch about 1100 a month, however if I added a 4th bedroom in the basement, I'll get @ 1300 a month in rent.The basement takes on water, needs to be partially finished, (walls/floor/outlets/lights/ etc) plus an egress window needs to be installed.Rough numbers when all is said and done will be 9-10k, with the waterproofing eating up most of that estimate.

I'm hoping those experienced with these can shed some light on the pros and cons.

Your 2% reserves is light to me - to me reserves should cover at least a roof replacement and 2 appliances or the cost of replacing a water heater and an AC unit minimum.

This includes replacing all older AC units, updating kitchens with new countertops, paint cabinets, updated light fixtures, including ceiling fans, updated vanities in the downstairs 1/2 bath and a few others odds and ends for the place to look updated.  

All this said, you too could be a Serial Mover as I am, and just keep moving into light fixers, stay a year or two, and move on again.  

But you will have to take a look at some of the items that might be effected by that: outlets, light switches, other trim like window trim, baseboards or crownmoldingOnce you open up the walls and a framing inspector sees that, they will make you bring things up to code.

Slate walks, window-filled 3-season room, lighted ceiling fans, polished wood trim.

Seriously though, as I now have kids an open floor plan from the kitchen into a living area is important as is natural light.

Nothing helped beyond some light surface rust as well as making the unaffected areas appear cleaner.

I have searched the threads on BP and haven't come across that much information so I'm hoping you all could shed more light on the subject.