Based on market data for the Denver area, a basement ADU conversion typically generates between $1,200 and $2,000 per month in rental income.

While garage conversions can potentially yield higher monthly returns (ranging from $1,500 to $2,500), basement conversions remain the most popular option for Denver homeowners. This popularity is largely due to the lower initial investment required, with typical construction costs ranging from $40,000 to $80,000.

To maximize this income potential and ensure the unit is legally rentable in Denver, the project must adhere to specific requirements, including:

• Zoning Compliance: Ensuring the property is in a residential zone (R-0 through R-4) that allows for ADUs.
• Lot Size: Maintaining a primary lot size of at least 5,000 square feet for attached units.
• Owner Occupancy: Following the city mandate that the owner must occupy either the primary residence or the ADU for the first three years.
• Permitting: Obtaining proper building permits through the Denver ePermits portal, which includes verified site plans and energy calculations.