@S Rodriguez - Good point. Will have to check. @Jmc101 - Responses below: No refrigerator. While it is not depicted, I intend to have a small refrigerator either in the cabinetry under the stove or as a stand alone. is "Storage" intended to be the ONLY storage for clothes and linen/towels? What about a dresser? Mmm...yes. I had not thought of a dresser. There is room to expand the right wall, behind the area marked "storage", further into the basement. However, due to the vents behind the wall the ceiling height would be lower than the rest of the room. is there additional storage outside of this room? The rest of the basement has a lot of empty room but I wasn't planning on giving any additional storage to the occupant. There is no room to move between the counter and sink in sketch 2. The sketch is not drawn to scale but that is a valid point. Need to double check. is the only access through the sliding door? There is a door (first pic above) which leads to the basement and the laundry room. However, the sliding door (which will be replaced by an entry door) is the primary access.

What do you need in that entry? A place to put your keys, your purse, mail, a couple of coats. I'd put a couple hooks for coats above the bench. A shelf and a mirror on the other wall. On the shelf put a bowl for keys. You always need a mirror for one last look before you leave the house.

I would not do 2 rugs and I don’t think you have the room in the DR for a rug the right size . It would need to be 36” bigger on all sides than the table and to do that you would create tripping hazards in the doorways and just not work . BTW all the art needs to be lowered the center of the pice at 60” from the floor is nice in a DR . You drapes at least twice as full as you have so 2 more panels for sure. As fro the entry a rug large enough for 2 people to stand on if this is a house and if a cindo type entry just a samll mat I see arug that looks like it is in the LR so maybe post a pic of that space so we can give you an idea of a entry mat.

(FWIW, ceiling heights in basement apartments might not be biggest concern. I know of two basement units right on my street that have been renovated within the last few years. Both have had stable tenants paying $1600/mnth and $1750/mnth. This despite the fact that although the units look nice, it is clear that they are not legal, with bulkheads at around 6ft and original-sized windows that are too small. yeah, I know. The reason isn't just about legalities, it's about money. Rental Real Estate is a long term game. There's a number of things that can do you in. Legal is one of them, but the cost to entry is much lower. The other con is that real estate is hot right now, been hot for quite a while. So what happens when things aren't so favorable? This isn't to say that if you do xyz, legal etc. That you won't have trouble. Crap happens. Life gets in the way. As you said you don't want to be told what to do. This situation you got is complicated, you do all the work upfront pay for it, then the process of getting paying tenants etc. Not everyone is cut out to be a tenant, not everyone is cut out to be a landlord. If you catch my drift. There is no amount of planning, doing that can prevent life happen type scenarios from happening. I've seen too much... I've condensed this down. Rental real estate can be 'easy'. But often times things get exagerated in terms of how much you make. Especially if you carry debt. This reno is likely going to cost well into the 30K range, maybe more no matter which or how you decide. Unless you do the work yourself, which takes more time. That's a lot of money to stick out there with no realization of ever turning a profit. Remember, this looks much easier from the outside looking in. Tenants don't care about half of what you think they might. Until they do care. As long as a place is clean, nice looking, nice area, nice schools many times that will do it for most. But things go bad after a tenant moves in. I feel the floor removal method is the better way mainly for the access to redo the plumbing runs and get the place height legal. (is it perfect, no not really. It's a choice that opens more options when it's far easier to fix things not thought of when the house was built.) The HVAC stuff is secondary for a basement. There will be little need for conditioning a basement. If the HVAC is problematic for the upper level then obviously before you finish the basement would be a good time to shore up those issues. I think dehumidification / some AC / little heat is really all you need for a basement. If this is your first endeavor into rental real estate, you've got your work cut out for you. It's always adviseable to do 'easy' first. This is complicated for a wide variety of reasons. Not saying you can't do it, but after trying it... well I first rented a home over 30 years ago. It was a complete disaster. Tenants stop paying 3 months after moving in. It took me the better of 20 years to get over those mistakes, and the visual nightmares as a result. Trust me when I say this is not easy, not for the faint of heart. If it was easy, everyone would do it. It's glamorized primarily because RE often is sold because of how glamourous it is. That's misleading when you're knee deep in crap after you've bought it. If this is a "house hack" kind of project, you're slightly better off in terms of getting your money back. But it's easily a 3 - 4 year project of working for nothing, dealing with tenants etc. Meaning this investment is going to take at least 3-4 years of your life before you show a nickel of profit. That's provided there isn't some unplanned "life happens" event that effects you or your tenant. There's far more to consider here, it's not meant to discourage you but as you noted the likely illegal rentals in the area... they're likely illegal due to? money. The whole reason you are contemplating doing this.