Real Estate and Home Mortgages - Finishing a basement Return on Investment

What is the general % on return on investment when finishing a basement.

Depends. Are you doing the work yourself or hiring it done? Into what are you turning the space? What's the rest of the house? What are other houses in the neighborhood like?

Most of the homes have unfinished basements. Its a newer neighborhood about 3 years old so they are still building and probably won't reach full capacity for another 2-3 years. House is approx 2500 sq feet topside 4 bed, 2.5 bath and about 1200 in the basement. Plan is to do a living room area, full bath, and bedroom. Builder wanted 25k to finish it (basic finishing package, bath included). My guess is I can get it done for about 12-15k with some of the work done by myself.

Good. In a new neighborhood, you have to do something to set yourself apart from the rest of the homes, or there's no reason for anyone to buy your used home over a new one. Do the work yourself and you stand a good chance of being able to show a profit on your work.

So you're saying its roughly dollar for dollar return on investment or more on a basic basement finish (nothing elaborate)?

It's too complicated to be that specific. Best bet is just to finish it to meet your needs while living there rather than worry about ROI.

Rooms below grade, or enclosed patios, even heated and cooled, will not bring value that the rest of the house does. Very few home improvements come anywhere close to increasing value the same amount as your investment. However, they can increase marketability--not necessarily the same thing. If comparing 2 houses that are the same, but one has a finished basement, for roughly the same money, which looks more appealing? Might only be worth $2000 more, but would cost the new homeowner $8,000 to do themselves (for example). The expense the seller went through doesn't increase the value significantly, but makes the house more appealing to the buyer so they'll be selling before the other house does.

If you're doing this to sell, I probably wouldn't get into it. If you plan on staying there, do it for the sake of the project and enjoying your home--not to increase value. Most home improvements are a black hole from which money never returns. LOL

It all depends on who's buying the house. I would agree, for most people it increases the value. For me, it decreases the value. I saw every finished basement as taking away from my perfectly good basement.

If you are in the south the return on a finished basement is much less than up north. When you sell, you will be trying to sell against homes with finished basements that have much more square footage. - It is that simple.

For the same finished living area, a home with a finished basement will have much lower utilities than an above grade house with the same finished footage. - So obvious it is frequently overlooked.

Dick