Basement conversions in Colorado Springs are a great way to house hack! Real estate investment strategies often focus on maximizing returns with minimal initial investment. In Colorado Springs, one of the most effective methods to achieve this is through basement conversions, especially when the investor is open to living in the renovated space.
Below are the biggest factors to consider when thinking about a basement conversion house hack
The Advantage of Basement Conversions
Basement conversions stand out as a particularly appealing option for several reasons:
- High Availability: A large portion of single-family homes in Colorado Springs come with basements, making this strategy widely applicable.
- Cost-Effectiveness: Basements often provide a blank slate at a lower cost compared to other types of renovations or property conversions.
- Simplicity for Beginners: For those new to real estate investment or house hacking, converting a basement can be a more straightforward and manageable project.
Potential Drawbacks
Like any investment strategy, there are cons to consider:
Privacy Concerns: Living in a basement means less privacy and the possibility of noise from upstairs tenants or vice versa.
But remember this is a strategic move to improve your financial situation. It will take some sacrifice.
Key Features To Look For
When evaluating a property for basement conversion, pay attention to:
Separate Entrance
Properties that already have a separate entrance for the basement are ideal. This could be a walkout basement. Sometimes there are creative ways to make a second entrance. For example: split level homes, a garage that walks into the basement, or even cutting through the foundation to make a second door.
Sometimes creating the second entrance only involves some light framing or installing a door.
Other times it will involve cutting through the foundation to make a new entrance. If you’re thinking about breaking through foundations for a new door, you are looking at about a $10k. I would recommend looking for a property with an easy entrance.
Sewage and Plumbing
Understanding the location and accessibility of sewage lines is crucial. Can you tie in the pipes above ground or do you need to dig up the concrete. Both are doable. Above-ground connections are preferable, as breaking concrete is more difficult and will add some expense.
To find the main sewer line you are often looking for a large black pipe running down a wall and into the ground. Usually found in a closet or a mechanical room.
Water
It is usually pretty easy to run water lines wherever they need to go. The closer your sink to the hot water heater the easier and cheaper this should be.
Electrical
Can the electrical box handle additional load is important? Look in the electrical panel to see if there are any breaker spaces left. If not, electricians can sometimes make it work by combining circuits. Have your realtor message their electrician if this isn’t straightforward.
Sometimes you have to upgrade the whole panel and that can add 5k to a basement project.
Running wire where you need to go is another consideration. However, I hardly consider it because if you have seen electricians work their magic when fishing water you know its impressive what they can do. A good electrician can make wire go almost anywhere it needs to with minimal drywall damage.
Finishing the Space
What does the rest of the space look like? If you are going to live there you can get away with it being as finished as you like. If you are going to rent it out and live upstairs you’ll want to finish any unfinished areas to command higher rent.
Assess the cost and extent of work needed to transform unfinished areas into a livable space.
This is where using an experienced realtor to help you ballpark is important. They can also help bring in their GC for bids while you are under contract.
Zoning thoughts
Duplex Conversion: In areas with R2 zoning, converting a basement into a separate dwelling unit can be a strategic move, potentially increasing the property’s value significantly. This isn’t necessary for a good basement conversion.
Full kitchen or kitchenette
If you live in a single family zoning you cannot legally have two stoves. It’s an odd rule I know, but it is in the city code. There are two ways around this:
Kitchenette: You can easily make a kitchenette with a sink, cabinets, a fridge a microwave, a toaster oven and a plug in counter top oven. This is the most cost effective option.
You can go the Accessory Dwelling Unit (ADU) or the Accessory Family Suite (AFS) route.
ADU/AFS are two similar routes that require you pulling the permit for one of these designations and getting inspections along the way. Pulling these permits and having the addition designated as an ADU or an AFS allows you to put a full kitchen in the basement.
Exit plan
When you are ready to scale and move to the next house hack consider renting out the basement and the main level separately, or even renting by the bedroom.
Basement conversions in Colorado Springs offer a practical route for real estate investors looking to maximize their investments. Living in the basement (or renting the basement) can significantly enhance the financial benefits of house hacking.