THE MATHEMATICS OF

REFINISHING A BASEMENT
REMODELING PROJECT
Diana Roberts
Math 1030

Overview

Project Description

Project Methodology
Key Findings/Results

Evaluate the financial pros and cons of

refinishing a basement in a rental property.
Compare selling and renting after the
remodel.

To remodel or not.
To sell or continue renting out.

Conclusion

Project Description

Evaluate the financial pros and cons of

refinishing a basement in a rental property.

PROS

Increased resale value of home

Increased rental income

CONS

Cost is it worth it?

Down time

Procedure/Methodology

Set a budget of $10,000

Procedure/Methodology
Project Cost Breakdown
Demolition (will do myself)

Shower Door

Drywall

Can lights

Vanity

Toilet

New windows

Paint

Vinyl Flooring

Carpet

7%

21%

26%
5%
3%
4%

14%
4%

16%

Procedure/Methodology

Obtain three bids from building

contractors.

Choose a bid I chose the median labor

rate of $50/hr.

Original: 3 bedrooms, 1 bathroom, 1978 sq.

ft.
Final: 4 bedrooms, 1.75 bathrooms, 1978
sq. ft.

The cost of materials was fixed.

Features that determined the cost

Add a bedroom

Procedure/Methodology

Next, I compared the monthly rental

rates of similar properties after the
remodel.
Based on the data in the chart below, I
decided I could raise the rent by
$550/month.*
Property #
Bedrooms
Bathrooms
Rent
1

$1,500

$1,425

$1,450

$1,395

$1,450

* Source: ksl.com

Procedure/Methodology

Calculate the break-even point based on

an increase in rental income of
$550/month.
Balance by Month
$10,000.00
$9,000.00
$8,000.00
$7,000.00
$6,000.00
$5,000.00
$4,000.00
$3,000.00
$2,000.00
$1,000.00
$0.00
1

MONTH

10 11 12 13 14 15 16 17

Procedure/Methodology

Compare Sold prices (per square foot)

of similar properties before the
remodel.
Price/Sq. ft.
$180
$160
$140
$120
Price/Sq. ft.

$100
$80
$60
$40
$20
$0
0.5

1.5

2.5

3.5

4.5

5.5

Procedure/Methodology

Compare Sold prices (per square foot)

of similar properties after the remodel.
Price/Sq. ft.
$180
$160
$140
$120
Price/Sq. ft.

$100
$80
$60
$40
$20
$0
0.5

1.5

2.5

3.5

4.5

5.5

Procedure/Methodology

Finally, I calculated the difference in

projected sales price for my house
(including 6% realtors fee).

94%($249,230) 94%($225,000) = $22776

The cost of the remodel is $9350, giving

a projected profit over the remodel cost
of $13426.

Key Findings/Results 1

To Remodel or Not

The cost of the project was acceptable within the budget constraint.
If I continued to rent the property, the
break-even point would be 17 months.

Key Findings/Results 2

To Sell or Continue Renting Out

The estimated sales prices before and after
the remodel were both in line with market
expectations.
The projected profit from the sale after the
remodel of $13,426 is below my
expectations.
However, with the increase in rental
amount of $550 per month, an equivalent
profit could be achieved in 17 months.

Conclusion

In conclusion, based on these factors, I

would choose to go ahead with the
remodel and continue to rent the house.

Questions and Discussion