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Unfinished Basement → Rental Apartment (ADU)
Transform an unfinished basement into a fully permitted, code-compliant rental apartment (Accessory Dwelling Unit) with a separate entrance, kitchen, bathroom, bedroom, and living area that generates $800 to $2,500 per month in rental income.
Cost Range
$40,000 – $120,000
Timeline
8–24 weeks
Materials Cost
$66,200
Permits Cost
$3,500
Before spending any money, confirm your municipality allows basement ADUs. Many states have recently passed ADU-friendly legislation (California, Oregon, Colorado, Washington, New York), but local zoning still varies. Contact your local building department or visit their website. Key questions: Is a basement ADU allowed on your property? What are the minimum ceiling height requirements (typically 7 to 7.5 feet)? Is a separate entrance required? Are there parking requirements? What permits and fees are involved? Some cities now offer pre-approved ADU plans and reduced permit fees to encourage construction.
Estimated time: 7 days
Measure your basement dimensions and ceiling height. If your ceiling is below 7 feet, you may need underpinning (lowering the basement floor) which costs $30,000 to $70,000 and is a major structural project. Identify the locations of existing plumbing stacks, electrical panel, HVAC equipment, and water heater — the apartment layout should work around these. Check for moisture issues by inspecting walls and floor for signs of water intrusion, efflorescence, or mold. Address any water problems before building.
Estimated time: 3 days
A basement ADU needs a bedroom (minimum 70 square feet with egress window), a bathroom with shower or tub, a kitchen with sink, stove, and refrigerator, a living area, and a separate entrance. Hire an architect familiar with local ADU requirements to draw plans — budget $2,000 to $6,000 for architectural plans. The architect will ensure the layout meets all code requirements including egress, ceiling height, room sizes, natural light, and accessibility. Submit these plans with your permit application.
Estimated time: 14 days
Submit your architectural plans to the building department for review. You will typically need a building permit, electrical permit, plumbing permit, and mechanical (HVAC) permit. Plan review takes 2 to 8 weeks depending on your jurisdiction. Budget $2,000 to $5,000 for all permits and fees. Some cities with ADU incentive programs offer reduced fees or expedited review. Do not begin construction without approved permits — unpermitted rental units create enormous legal liability.
Estimated time: 30 days
Before framing any walls, ensure the basement is dry. Apply waterproofing membrane or sealant to exterior foundation walls if accessible, or use interior drainage systems (French drain around the perimeter leading to a sump pump). Install a sump pump with battery backup if you do not already have one. This step costs $3,000 to $10,000 depending on severity of moisture issues but protects the entire investment.
Estimated time: 7 days
Frame interior partition walls to create bedrooms, bathroom, and kitchen per the approved plans. Install egress windows in every bedroom — egress window wells and windows cost $3,000 to $8,000 each and require cutting through the foundation wall. This is a code requirement for any sleeping room and cannot be skipped. Rough in all plumbing (drain, waste, vent lines for kitchen and bathroom), electrical (subpanel, circuits for kitchen appliances, bathroom, bedroom, living areas), and HVAC ductwork or mini-split line sets.
Estimated time: 21 days
Insulate exterior walls with rigid foam board (R-10 to R-15) or spray foam. Frame an interior wall over the foam and add fiberglass batts for additional R-value. Insulate the ceiling between the basement and main floor for sound isolation — mineral wool is excellent for soundproofing between units. Hang and finish drywall on all walls and ceiling. Paint, install flooring (luxury vinyl plank is the most popular choice for basement apartments — waterproof and durable), install kitchen cabinets and countertops, set bathroom fixtures, and install all finish electrical (outlets, switches, light fixtures).
Estimated time: 21 days
Most jurisdictions require a separate entrance for a rental ADU. This typically means adding an exterior door with a small landing and stairs, either at the side or rear of the house. Budget $3,000 to $8,000 for the entrance depending on whether you are cutting a new opening or expanding an existing window opening. Schedule and pass all required inspections: rough framing, electrical rough-in, plumbing rough-in, insulation, and final inspection. Obtain your certificate of occupancy before advertising for tenants.
Estimated time: 14 days
| Material | Est. Cost | Required |
|---|---|---|
| Architectural Plans (licensed architect) | $4,000 | Required |
| Permits and Fees | $3,500 | Required |
| Waterproofing and Sump Pump System | $5,000 | Required |
| Egress Windows and Wells (2) | $8,000 | Required |
| Framing Lumber | $3,000 | Required |
| Insulation (rigid foam + fiberglass + mineral wool soundproofing) | $3,500 | Required |
| Drywall and Finishing Supplies | $3,000 | Required |
| Electrical (subpanel, wiring, outlets, fixtures) | $6,000 | Required |
| Plumbing (kitchen and full bathroom rough-in and fixtures) | $8,000 | Required |
| HVAC (ductless mini-split or duct extension) | $4,000 | Required |
| Kitchen Cabinets, Countertop, Sink, and Appliances | $5,000 | Required |
| Bathroom Fixtures (toilet, vanity, tub/shower) | $2,500 | Required |
| Luxury Vinyl Plank Flooring | $2,000 | Required |
| Interior Doors, Trim, and Paint | $1,500 | Required |
| Separate Entrance (exterior door, landing, stairs) | $5,000 | Required |
| Smoke Detectors, CO Detectors, Fire Extinguisher | $200 | Required |
| Separate Utility Meters (electric, if required) | $2,000 | Optional |
Required for all structural work, framing, and change of use. Includes plan review by the building department.
$2,000
Required for the new subpanel, all circuits, and fixtures. Licensed electrician pulls this permit.
$500
Required for new kitchen and bathroom plumbing. Licensed plumber pulls this permit.
$500
Required for new HVAC system or duct modifications.
$300
Issued after passing final inspection. Required before legally renting the unit.
$200