In my experience a lot of STR people all reiterate the same information so I am excited to have some personalized recommendations 

It has been me and my team's and experience that location, is important but...people will make due where they can to own vice rent. 

I’m being asked to provide 12 months of cancelled checks in addition to a lease to prove that I’m renting.

But you don't have the experience to handle this one, if they are not.  

How was your experience?

You are ultimately adding additional detached living space which should add to the appeal to a future buyer/tenant, or for your enjoyment.Come on man! 

If it were $10k-$20k loss I'd probably just chalk it up as a learning experience and sell it, but I just don't know if I can stomach a $40k-$50k loss.

What was your experience like?

Hey Jon, Depending on the DSCR, property type, and your experience, you may be able to put as low as 15% down on a DSCR loan. 

Now the minimum standards your basement has to hit for it to be able to count as assessed sqft not estimated is a height of 7 ft, a point of egress (bilco doors) and a window usually in the rear, It's one of those things where if your going to go through the process of digging out a basement you might as well go for it and dig it deeper then 7 and closer to 8 ft so you actually stand out compared to the competition.Now the other side of this coin which I would suggest is if you're willing to spend 40-50k on a basement dig, consider adding a 3rd story addition if your a 2 story (think master suite, walk in closet, master bath) or an addition off the back and add a roof deck if your a 3 story (either master suite or just additional bedroom).