Great Question! I'm actually working on a personal project right now where I decided not to permit the new basement as an ADU and instead permit an ADU-ready space that I can change later.

The biggest questions you need to ask yourself are 1) what do I want to use the space for, and 2) what does my city/county allow and how hard/expensive is it to get permits?

Option 1: Create a basement ADU
This is a good option if it's clear that you want a separate living space that will probably be used as a full-time rental. The biggest difference between a basement ADU and a finished basement is that it has a separate address and a full kitchen. If you want to have a full time renter in your basement, an ADU is a good way to go. 

Option 2: Finish my basement
If you're looking to Airbnb, then an ADU isn't necessary. And in fact, in some cities like Portland, OR, you're better off short-term renting a basement with bedroom(s) than an ADU because the city charges you much more for the permit if that is your plan. To have a nice short-term rental, you don't need a full kitchen. A sink, small fridge, and microwave is usually sufficient for guests.

In my case, I like to have options so ADUs have seemed like the way to go. Who knows what will happen with the short-term market and it's great to have the ability to put a long-term renter in the space. Plus, if you're spending all that money, you might as well spend a little more and give yourself more options and potentially create more value for your house.

​However, like I mentioned above, for my most recent project, I'm designing the basement to ADU code, but not getting the permit yet because in Portland, they restrict the use of ADUs for short-term unless you pay a significant price. If the time comes when I want to change the status to that of an ADU, I can show the plans I used to permit the basement work, add a 220 outlet and stove, pay the permit fees, and we're done.

Lots of things to consider, but if you're asking the right questions, the right answer will surface.

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People are often intimidated by the city and their processes for ADUs. In general, cities are usually fairly helpful with homeowners interested in undertaking an ADU project, and ADU basements are the usually the easiest kind.

The first thing to do is visit the web site of your city's building and planning department and download any materials you can find regarding ADU rules. Read all of it. Twice. Without much context not everything will sink in and much of it won't apply to you. But the things you do remember and those that might apply to you will help you ask better questions.

Now that you have a good list of starting questions, it's a good idea to sketch out your basement on paper. It doesn't have to be too fancy, just showing the dimensions, ceiling height, and locations for windows, doors, furnace, water heater, electrical panel, etc.

With these two steps completed, head down to your local office and show them what you have. You'll also probably have a list of questions like "will I have to move my electrical panel" or "does the stairway down to the basement have enough headroom?" Keep in mind, they will generally only answer questions and not volunteer much, so the more you ask, the better.

If you want to get the permits on your own, you'll probably make at least 2-3 trips to the city, each time improving what you present to them and each time armed with better questions. At the end of this process, you should have a drawing that is stamped for approval like the one above, which was the plan for my personal basement ADU.

Many people are concerned about water damaging their basement and that fear keeps them from doing their basement project. While water can be a big problem, the cause of water is usually relatively simple to fix and most often not a reason to keep you from remodeling your basement.

Water usually leaks into your basement from one of these things:

Leaky Gutters. It's hard to believe how often gutters are left to hang off the side of a house, leaving a gap for water to flow directly into the house foundation and then into the basement. Always keep your gutters cleaned and attached firmly to your house, and if you have some water coming into your basement, the first place you should look is the gutter outside.

Gutter Drainage. If water is running properly down gutters, there will be significant amounts to deal with. Make sure the water is being diverted far away and downhill from your house. There's little point to gutters if all the water is channeled right to the foundation of our house and into your basement.

Neighbors Gutters/Roof. In some cases water is running from a neighbor's house straight into another foundation. If your gutters are good, check your neighbor's.

Sloping Lot. Houses on slopes cause the biggest basement water problems. Water runs downhill and if your house is on that hill, water will want to run into your foundation. This is usually when people have french drains installed, which is basically a channel of gravel along your foundation that moves water away and past your house. This gets a bit more expensive, but usually not enough so to deter people from making a safe investment in their basement remodel.

And always remember, if your basement has water problems, they always need to fixed from the outside. Even if you do your project and later have water, the majority of the work will come on the outside of the house.

Sound insulation is a big question to answer for most people looking to finish or remodel their basements. It can seem like an added, unnecessary cost, but the difference it can make is impressive, depending on how you do it.

If you choose to add no sound insulation to your basement, you'll be able to hear pretty much everything happening upstairs when you're in the basement. When you're on the floor above, it will be slightly quieter, but things like TVs and people talking below will be audible. In addition to sounds, people in the basement will hear everything that vibrates, including walking on the floorboards above. Sometimes this banging noise is what's hardest to deal with when in basements.

One of the first things you can do is add carpet to the floors above. It dampens the vibration of people walking and absorbs some of the noise. It's one of the most cost-efficient ways to decrease sound in basements.

Moving into the basement, if you're dealing with an unfinished ceiling, you have quite a few options. First, consider adding 5/8" drywall or thicker. You can also add multiple layers of drywall for double protection. And if you want to add even more, there's a product that some people swear by that you can spread between the two layers of drywall to help with sound even more.

In addition, using insulation in the ceiling joists can help absorb even more sound. You'll lose the benefit of heat traveling up through the floorboards, but the sound barrier often outweighs it. A higher r-value doesn't necessarily mean more sound insulation. Look instead for the thickness that best fills the open space in the joists.

And finally, consider using resilient channels. These are metal strips that you attach perpendicular to the joists, to which you fasten the drywall. This effectively hangs the drywall below the joists so it doesn't touch them directly. This keeps much of the vibration of walking above from reaching the basement. Be careful though, we've heard that 60% of these channels are installed incorrectly and can lose their sound effectiveness with just one screw being driven into the joist, which transfers the vibrations to the drywall, and then to your ears.

Many people considering a basement remodel often wonder if they need to install egress windows as if it's something they are only doing because they have to. The reality is, adding egress windows to a basement is one of the best ways to make your basement more livable.

Adding egress to your basement isn't only about safety. It's important to have a way to escape in case something blocks your normal exit out of your basement, but you can also take advantage of this code requirement and design what can be the best part of your basement.

Our suggestion is to choose the biggest window you possibly can. You're already paying for the digging, concrete cutting, and installation, why not add just a bit more and create a focal point that everyone can enjoy.

Next, think of your egress window as your connection to the outside. Not only will it let a lot of light into your basement living space, but it's possible to design a nice, relaxing view. Tiers down the side or different sized potted plants can add lots of green texture and bring nature down to you. Put your couch or chairs under the egress filled with plants and when sitting, you'll feel like you're in the outdoors, which is the opposite of what most basements feel like. Lay some nice rock at the bottom of the well and it will keep dirt from splashing up on the glass when it rains and will bring a nice touch of zen.

It might seem like a lot to add egress, but if you do it right, you'll be very happy with it. So happy that if you do another basement project, you might want to add extra windows. We did.

A key aspect of a basement apartment are the entrances/exits. Many people want to finish their basement only to find out that it will be more work than they had hoped because they don't have the required access.

If you're finishing your basement for a family member or someone you're close to and you don't mind sharing the rest of the house, you'll most likely have a door that connects the basement to the rest of the house. If your basement is below ground, you'll probably also need an egress window for a second exit point. An egress window has to be a certain size determined by your local codes and be big enough for people to escape through in the event of an emergency. If you have a bedroom in your basement, it must have egress. If you are finishing more of an open studio space, you should check your local codes.

If you are finishing your basement as a separate apartment and trying to maximize rental income, you'll need a separate entrance for the people living there. It's possible to build an entrance, but it will mean cutting into your foundation and digging out a landing and space for stairs. Whether or not your basement has an exterior entrance is a big factor for people trying to figure out their options.

You'll also need to examine how the basement is currently connected to your main house. If there is a doorway between the two, you'll need to look at closing it off, or complying with local building codes, which might mean adding a fire door to create fire separation between the two units.

Lots to think about, but the good thing about basements is that your options are limited and so decisions are easier.