You walk into a property you're looking to buy and rent and you walk down into the basement and voila! you find a full second kitchen. Great! You start calculating how much rent you could get if you could rent the downstairs separate from the upstairs and the cashflow is out of this world! But wait, there are a number of very real problems with this scenario. First of all, it's illegal unless the property is zoned for more than one tenant and the property has been converted to non-residential use. But there are even more practical reasons why having two separate tenants is often not a great idea. The first is the utilities. Since it's a house there will only be one bill for Excel and water. Who's going to pay it? Can you really get the tenants to pro-rate their share if you pay it? Good luck. Or do you just pay it, figuring the extra rent will more than offset paying the utilities? Maybe, but what you'll find is that when a tenant is not paying the utilities they have the heat at 90 degrees all winter and every time you go to the house the kitchen sink is running. Your great cashflow gets eaten up by outrageous utility bills and you're back where you started. For these reasons and many more I suggest you don't try to put two tenants into a property made for one. But that doesn't mean the second kitchen has no value. It might be useful for an extended family who needs the extra space kitchen and might actually command a larger rent. Check with your local building department and your insurance agent though, to make sure it's acceptable to have a basement kitchen in the first place.
Wow! With all of the negative press on the real estate market it is really great to see how each local market is actually doing independently of one another. It makes sense when you see the map on where many areas are declining. My question is, will the declining markets "shift" in the next few quarters?
It seems to me that a basement Kitchen would only add value if the buyer has a need for it. Otherwise I would think that it is taking up valuable square footage
Basement Kitchens definitely have some intrinsic value. I agree with the blogger, it is not the best idea to add two families in house meant for one family.
I actually do not add any value for a basement kitchen. Unless the house is zoned for two units the basement kitchens are useless.
Basement kitchens are good if you have a separate entrance and you have a mother-in-law situation with a family. If you have clients that want to separate the house for varying reasons it is great to have all that work already done.
I do think that basement kitchens add value. They add features and are a creative way of using spaces in basements
I am not a big fan of the basement kitchen. From my experience they were not installed up to code and it costs more to fix them then they are worth.
Great discussion, it seems that unless your client really wants a kitchen downstairs that the majority of people see them as a negative when viewing properties.
Great information, we need to keep our clients informed with data like this. All of our investor clients need to be very aware of issues like this when looking at properties.
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