How to Convert Your Basement into an Apartment (Legally)

Whether you’re a new owner or have lived in the same house for decades, if you’re contemplating turning that underused basement into a finished and comfortable apartment, you have myriad considerations to make before you start wielding a hammer.

Step 1 - Check with the City and County before Remodeling the Basement

Your very first, and probably frequent, stop will be at the city and county planning departments. You’ve got to know and understand the regulations in place to know if the project is even viable.

While it’s fine to convert a basement into an apartment in most areas, there will be loads of rules about how to go about it.

You’ll want to find out about regulations regarding the number of parking spaces, maximum occupancy, fire escapes, and zoning, to name just a few.

Read every bit of information you can obtain on the topic. A basement conversion is expensive and time-consuming. You don't want to ‘break ground’ on the project without certainty that you won’t run into regulatory issues down the road.

Also ensure there are no restrictions against multi-family occupancy. These can be prohibited by zoning ordinances or homeowners association rules.

Regulations may be different if you plan to rent out the space than if you intend to use it for in-laws’ quarters.

Step 2 - If You Plan to Airbnb Your Basement Apartment, Check the Regs

There are myriad reasons to convert a basement into an apartment. You may be using it for parents or older children. Maybe you’re allowing a friend or a nanny to live there. Maybe you want to rent it out for additional income.

Whatever the reason, think ahead to how you’ll go about advertising and renting the space.

If you plan to use a service such as AirBnB or VRBO, make sure you understand their requirements so you don’t have any surprises when the remodel is done.

Step 3 - Create a Budget for Your Basement Conversion

The next step in the process is to create a budget. Up until this point, all you’ve done is ask questions and seek information. Putting numbers to paper will help you conceptualize what the entire project will cost you.

Remember to include materials as well as the cost of professional services, such as those by electricians, plumbers, and contractors.

There are many layers to an accurate budget. Think top to bottom (or bottom to top if you prefer). Will you need to add stairs or an exterior door?

Do you need to build a deck or patio? Is there going to be separate rooms or will it be a studio apartment?

When you’ve run all the numbers, can you still afford to build it? If so, it’s time to map out the actual blueprint and see if the budget fits the dream design.

Step 4 - Create a Blueprint

Depending on the depth of the project, consider hiring an architect to design your blueprint. Having a professional map it out not only provides a creative and thorough template but also ensures everything will meet local building codes.

Especially when working in a basement, it’s easy to miss seemingly small factors that can cost you big if you have to redo them—and an inspector will make you redo them.

You'll have to meet codes to pass inspections. It’s also essential for the safety of your guests or renters. If a unit isn’t up to code, you may not be able to get insurance for the space either. Do yourself a favor and don’t cut corners.

Your blueprint needs to include proper doorway widths, step depths, outlet placement, plumbing clearances, and egress access in order to meet code.

Zooming out from those details, the blueprint will also include each wall, both interior and exterior, that divides the space.

You may be adding a new exterior doorway for entering and exiting the space separate from the main house entrance.

This is the time to map out whether the basement will be a studio design or if it will have one or more bedrooms.

You will also need a bathroom space of some sort, and basic sitting areas at a minimum.

You may have the space to include dining and living rooms.

A large basement can allow room for a game area, bar, or other entertainment space.

The layout and function may vary depending on what you plan to use the apartment for. If it’s primarily a vacation rental in a high-tourist area, the focus will be on the necessities for short stays.

If you plan to rent it as a full-time residence, storage and amenities such as a laundry room will be more of a priority.

Your basement is part of your home, but if you’re planning for the apartment to be separate living quarters, you may want to separate water and electrical bills from the main living space.

During the planning stages, consider whether you'll need an additional water heater to meet the demands in the basement.

The same goes for other utilities. You may need to run gas into the space or add an additional furnace, AC, or heat pump.

If the electrical needs of the basement outpace your current electrical system you may need to add a second electrical panel.

Each of these devices adds a significant cost to the project. However, creating utilities that are separate between the main home and the apartment makes it easier to split up the bills.

It also allows you to shut down those utilities if either space sits unused.

Step 5 - Consider a Contractor

You may want to hire a general contractor to coordinate the conversion and be your point of contact while the work is underway.

A contractor takes much of the responsibility off your shoulders and keeps the project in motion while you monitor progress and go about your daily life.

A good contractor knows people in the business, from architects to engineers to framers and drywall finishers. That knowledge can save you a lot of time and research.

Plus, you can count on your contractor to make sure everything is up to code at every stage of the process. He or she can schedule inspections, order supplies, and coordinate subcontractors working on site.

Learn How to Get the Most Out of Your Building Contractor, how to go about Hiring a Contractor, and How To Use a Contractor's Time Efficiently to get started.

Step 6 - Special Considerations for a Basement Conversion

Whether you decide to hire a contractor or not, you’ll have plenty of decisions to make, invoices to pay, and work to oversee or complete. Plus, you’ll need to consider aspects that are unique to the basement environment.

Make sure you, your contractor, or any subcontractors know how to address them.

One of the first steps for converting nearly any basement is to apply the proper waterproofing. This ranges from making sure water runs away from the outside of the home to coating the basement walls with sealer.

You’ll likely also be adding a vapor barrier on the floor and perhaps other areas too.

Most basements are framed in concrete. That creates a different environment than on the stick-built level upstairs. Your ducting and plumbing will most likely be mounted outside the walls instead of within them.

You can leave them exposed or cover them with a drop ceiling or frame them in and add drywall.

In addition to plumbing, heating, and electrical systems, you’ll also be figuring out how to mount cabinets, wall hanging, mirrors, and other necessities into concrete walls. You’ll become very familiar with masonry drills and hardware.

If your floor was previously unfinished, you’ll need to decide on a floor covering that will function in the space.

A generation ago, homeowners solved this problem with rubber-backed glue-down carpet. But, this has no padding and is difficult to remove.

As long as you have a vapor barrier, modern carpets will do the job. This is an especially good option if your concrete is cracked and uneven from one end of the room to the other.

Similarly, you can install engineered hardwood, which is somewhat forgiving in basements that typically suffer from temperature variations and moisture.

The best option, however, is probably vinyl plank flooring. It’s inexpensive, easy to install, and water-resistant or even waterproof.

LVP (luxury vinyl plank) or LVT (luxury vinyl tile) is a snap-together product most DIY homeowners can handle themselves.

Even though plank flooring is easy to install, you may need to fill cracks or take the angle grinder to ridges in the cement before installation. For a really uneven floor, you may have to have it floated, which can tack on several thousand dollars.

Finally, consider adding soundproofing to your basement.

Like any downstairs apartment, noise from above will be an issue. Water running through the pipes, footsteps, vacuums, blenders, and the washing machine can make a pleasant space much less so.

Fortunately, there are a lot of options when it comes to soundproofing.

If you’re due for a flooring upgrade upstairs, you can start with a sound-buffering underlayment, especially if you’re installing a hard surface such as wood or vinyl, as opposed to carpet.

Back downstairs, look for materials specific to the task, such as soundproofing ceiling tiles.

Step 7 - Choose Interior Design Elements for Your Apartment

At some point, the framing, plumbing, wiring, and HVAC will be roughed in or completed. This is when you get to add the touches your renter will see.

There will be many decisions to make along the way. Most of them are no different than they would be for any other kitchen or bathroom, but you’ll want to make sure you’ve considered them all.

Will the cabinets in the kitchen, bathroom, and laundry area all match or will you select different options for each? Perhaps you’ll select a freestanding vanity for the bathroom but built-in cabinets in the kitchen.

You’ll need to make similar decisions about appliances throughout the space, as well as countertops, light fixtures, window blinds or curtains, and flooring.

Also remember you’ll be selecting paint colors for the walls. If you didn’t enclose the plumbing and HVAC work, you may want to paint it to match the rest of the ceiling.

Since basements notoriously have limited natural lighting, choose light paint colors to add brightness to the space.

The next layer is the furniture. Will you furnish the space or leave it unfurnished for your renter? Furnishing it will add a significant expense. However, it also allows you to mold the style for the space.

Finally, you’ll want to add the soft furnishings. Again, keep colors light and inviting. If you’ve furnished the space as a vacation rental, avoid bold colors unless it matches the vibe of the destination (i.e. Mexico or the Caribbean).

Keep it relaxing, minimal, and zen. Select throw pillows, blankets, curtains, and bedding that are crisp and clean looking.

Step 8 - Put Your Basement Apartment up for Rent

If you’re moving a child or parent into the space, you’re ready to go.

However, if you’re planning to use the space as a vacation or long-term rental, you have a few more steps to take. Make sure there is reliable access to the space through a keyless or keyed entry that’s separate from the house.

Handle the paperwork required by the rental company, such as AirBnB or a local rental management company. Depending on the company, you may have additional tasks to complete.

Alternatively, you may be listing and managing the space yourself.

Either way, invest in professional pictures of the space. Guests coming into town will appreciate a realistic snapshot of the rental they expect when they arrive. The truth is, good pictures sell or sink the rental, all other things being equal.

Don’t over inflate the space, however. Nothing leads to a bad review quicker than someone who feels they’ve been conned by a space that looks huge but is tiny, or a home that appears brand new but is dated.

In conclusion, the most important part of converting your basement into an apartment is making sure it is headed towards your final vision every step along the way.

Keep the goalpost in mind during the planning, building, and decorating stages and you’ll end up with a usable space that may also provide a substantial financial contribution to your home’s budget as well as its overall value when it’s time to sell.