You want to finish your basement, but you are not sure which direction to go. A home gym would save money on memberships. A family room would give your kids space to play. A guest suite could house aging parents or earn rental income. Each option costs real money, so understanding which one actually pays off matters. This guide compares the ROI of each basement type using verified data and Central Iowa market realities.

TLDR: Guest suites with bedrooms and bathrooms typically offer the highest ROI at 70 to 86 percent, especially with 2026’s multigenerational housing demand. Family rooms provide solid 70 to 75 percent returns with universal buyer appeal. Home gyms offer lifestyle benefits but buyer-dependent resale value. Your best choice depends on timeline, current bedroom count, and existing plumbing.

Finishing your basement is one of the smartest investments you can make in a Central Iowa home. But “smart” depends entirely on what you build down there. The wrong choice could mean spending $50,000 on a space that adds only $25,000 in value. The right choice could return 80 percent or more of your investment while improving your daily life.

Here is the challenge: most advice online talks about national averages without considering what actually sells in West Des Moines or Ankeny. What works in California does not always work here. And with multigenerational living becoming the top housing trend for 2026, the calculus is changing fast.

In this guide, we will break down the real ROI numbers for each basement type, show you what appraisers actually count, and help you decide which option makes the most sense for your situation.

Understanding Basement ROI Basics

Before comparing specific options, you need to understand how basement value works. It is different from above-grade space in important ways.

How Appraisers Value Basement Space

Basement square footage is NOT counted in your home’s main living area. Appraisers report it separately on the “Basement & Finished Rooms Below-Grade” line. This matters because basement space typically receives 50 to 75 percent credit compared to above-grade living area.

A 600-square-foot finished basement might add the equivalent value of 300 to 450 square feet of main-floor space. This applies even to walk-out basements where part of the level sits below grade.

National data shows basement finishing typically returns 60 to 75 percent of investment at resale. The 2022 Remodeling Impact Report found basement-to-living-area conversions averaged 86 percent ROI, with an average value increase of about $21,786.

Costs assume existing structural foundation and standard ceiling height. Additional costs may apply for egress window installation, extensive plumbing work, or code compliance requirements.

The table above shows why this decision matters. The difference between a family room and guest suite could be $25,000 or more in upfront cost. Understanding which investment pays off helps you choose wisely.

Guest Suite: The Highest ROI Option

Guest suites with bedrooms and bathrooms consistently show the strongest return on investment. Here is why they win in 2026’s market.

Why Guest Suites Lead in Value

A guest suite can increase property value by up to 12 percent according to industry data. The bedroom-plus-bathroom combination maximizes ROI because it serves multiple purposes: guest accommodations, aging parent housing, adult child returns, or rental income.

One case study showed a homeowner earning back nearly half their renovation cost in the first year through Airbnb bookings. Even without rental plans, the multigenerational appeal drives value.

Note: Rental income potential varies by location, local regulations, and market demand. Check local ordinances regarding short-term rentals before planning for Airbnb use.

2026 Market Reality: Multigenerational housing is the number one predicted home trend for 2026. About 21 percent of Gen X buyers specifically seek multigenerational homes. Housing costs, childcare needs, and eldercare demands are driving this shift across Central Iowa.

Guest Suite Requirements and Costs

To create a legal guest suite in Iowa, you need:

• Egress window meeting code requirements (5.0 square feet minimum)
• 7-foot ceiling height for habitable space
• Bathroom (adds $15,000 to $25,000 to project cost)
• Proper heating and cooling
• Smoke detectors (hardwired)

Important: Below-ground bedrooms add about 7 to 8 percent home value compared to 15 percent for above-ground bedrooms. Basement bedrooms are counted separately in appraisals, not added to your main bedroom count.

Pro tip: If your basement already has plumbing rough-in, a guest suite becomes significantly more affordable. Check with your contractor before assuming you need full plumbing installation.

Family Room: The Universal Choice

Family rooms and rec rooms offer solid returns with the broadest buyer appeal. They work for nearly every household type.

Why Family Rooms Work

Open, flexible basement space appeals to virtually all buyers. Unlike gyms (which appeal only to fitness enthusiasts) or guest suites (which require specific needs), family rooms let buyers imagine their own use.

Family rooms offer:

• Universal market appeal across buyer demographics
• Easy conversion to other uses if needed
• Lower cost than bedroom or gym builds
• Solid 70 to 75 percent ROI nationally

Families with teenagers often prefer rec rooms over extra bedrooms. The space handles games, movies, kids’ play areas, and entertaining without the code requirements of bedrooms.

Family Room Cost Breakdown

Basic family room finishing in Des Moines metro runs $20,000 to $35,000 for a 600 to 800 square foot space. This includes framing, drywall, flooring, lighting, and paint. No bathroom or egress window required unless you want sleeping space.

Tip: Design family rooms for adaptability. French doors plus a fold-out sofa can serve dual purposes as occasional guest space without the cost of a full bedroom build.

Home Gym: Lifestyle Over Resale

Home gyms require honest assessment. The ROI depends almost entirely on who buys your home.

The Home Gym Reality Check

Here is what most articles will not tell you: gym equipment is considered personal property by appraisers and adds zero value to your home’s appraised worth, though it may appeal to fitness-focused buyers. A $10,000 squat rack does not increase your home’s worth by one dollar on paper.

The finished space itself adds value as below-grade living area. But whether buyers see a gym as a selling point or a space they need to convert varies wildly.

Real estate agent perspective: “If you’re going to leverage a home workout space in your listing, make sure you have a dedicated space that clearly shows its purpose.” Half-bedroom, half-gym spaces do not help resale. Small basement gyms in cramped corners add minimal value.

When Home Gyms Make Sense

Home gyms make financial sense when:

• You plan to stay in the home 5+ years
• You currently spend $65+ monthly on gym memberships ($780+ yearly)
• You value workout convenience and will actually use the space
• You design for potential conversion to other uses

Equipment costs are separate and typically hold resale value well. A quality basement remodel for gym use runs $35,000 to $55,000 total with equipment.

Honest assessment: Most home remodels are lucky to break even on strict ROI. Home gym value is primarily lifestyle benefit rather than financial return. If you will use it daily, the membership savings and convenience justify the investment regardless of resale.

How to Decide: Your Personal ROI Framework

The “best” option depends on your specific situation. Use this framework to decide.

Consider Your Timeline

Selling within 12 to 24 months: Guest suite offers highest universal appeal, especially in competitive markets like Johnston or Waukee.

Staying 5+ years: Choose based on how you will actually use the space daily. Lifestyle enjoyment matters more than resale projections that far out.

Consider Your Current Bedroom Count

2 to 3 bedrooms currently: Adding a 4th bedroom provides high value because it expands your buyer pool significantly.

4+ bedrooms already: Family room may serve better since additional bedrooms show diminishing returns.

Consider Existing Plumbing

Rough-in present: Guest suite becomes more affordable and logical choice.

No rough-in: Family room avoids $10,000 to $20,000 in plumbing costs. Gym also avoids bathroom expense.

Central Iowa Market Considerations

Central Iowa’s market has specific factors affecting basement ROI.

Iowa’s high radon levels (71.6 percent of homes above EPA action level) mean any basement finish should include radon mitigation planning. This applies regardless of which room type you choose.

The Des Moines metro’s strong job market and family-friendly suburbs drive demand for additional living space. Communities like Grimes and Urbandale see particular demand for multigenerational features as families navigate housing costs.

Building permits are required throughout Central Iowa for basement finishing. Factor permit fees and inspection time into your project timeline regardless of room type.

FAQs

Q: Which basement type has the highest ROI?

A: Guest suites with bedrooms and bathrooms typically show 70 to 86 percent ROI, the highest among basement types. This is especially true in 2026 with multigenerational housing demand rising. Family rooms follow at 70 to 75 percent. Home gym ROI varies dramatically based on buyer profile.

Q: Do home gyms add value to a house?

A: The finished space adds value as below-grade living area. However, gym equipment is personal property with zero appraised value. Whether buyers see a gym as valuable depends entirely on their fitness interests. Design gyms for easy conversion to maximize flexibility.

Q: How much does it cost to finish a basement in Des Moines?

A: Des Moines basement finishing typically costs $16,000 to $35,000 for basic family rooms, $35,000 to $55,000 for home gyms, and $35,000 to $60,000 for guest suites. Per square foot costs range from $32 to $80 depending on finish level and features.

Q: Will adding a basement bedroom increase my home’s bedroom count?

A: Not in the main appraisal count. Basement bedrooms are reported separately as “below-grade bedrooms” and valued at roughly half the impact of above-grade bedrooms. They still add value, just not equally to main-floor bedrooms.

Q: Should I add a bathroom to my basement?

A: If budget allows, yes. Bathroom addition significantly increases basement utility and appeal. Guest suites without bathrooms lose much of their value proposition. Even family rooms benefit from a half-bath for convenience.

Key Takeaways

ROI Rankings

• Guest suites: 70 to 86 percent (highest)
• Family rooms: 70 to 75 percent (solid universal appeal)
• Home gyms: Buyer-dependent (lifestyle value primary)

Decision Factors

• Timeline: Selling soon favors guest suite
• Current bedrooms: 3 or fewer means bedroom adds value
• Existing plumbing: Rough-in makes guest suite more affordable
• Lifestyle needs: Long-term owners should prioritize daily use

Market Reality

• Basement space valued at 50 to 75 percent of above-grade
• Basement bedrooms counted separately in appraisals
• Multigenerational demand rising significantly in 2026
• Iowa radon levels require mitigation planning

Important Disclaimer: ROI figures are national averages and may vary significantly by market, home condition, and quality of finish. Consult with a local real estate professional for specific value estimates in your Central Iowa neighborhood. Basement square footage is valued differently than above-grade space in appraisals. This information is educational and not a guarantee of specific returns on your investment.

Ready to Discuss Your Basement Project?

Now you understand the ROI differences between basement options. The next step is talking with professionals who can assess your specific space, existing plumbing, and local market conditions.

Busy Builders has helped over 1,000 Central Iowa homeowners finish their basements since 2020. We understand local building requirements, market preferences, and how to maximize your investment.

Here is what we offer:

• Free consultation to assess your basement’s potential
• Honest guidance on which room type fits your goals
• Code-compliant design and construction
• Transparent pricing with no surprises
• Experience with guest suites, family rooms, and specialty spaces

Ready to get started? Contact us today:

Call: 844-435-9800

Website: https://busybuildersiowa.com/

We serve Des Moines, West Des Moines, Ankeny, Ames, Waukee, and all Central Iowa communities. Let us help you choose the basement investment that pays off for your family.

Busy Builders | Full-Service Construction and Remodeling | Serving Central Iowa Since 2020