Investor · north east · Member since 2023 · 2 posts · 1 vote
I am contemplating on my current project on wether I should make the current apartment a 3 bedroom but sacrifice the living room space or make it a 2 bedroom with a bigger living room space . When I refinance which would give me the most built up equity into the house ?
Investor · Miami, FL · Member since 2015 · 355 posts · 268 votes
2y
This is where real estate can be more art than science. Typically a 3-bed would have a larger living space than a 2-bed as you expect more people in the household. If you have living area to sacrifice, then a 3-bed could make sense. However if your living area is going to be noticeably tight compared to other 3-bed comps then you may want to stick to 2.
I think it depends on your exit strategy. If I am going to hold and rent, 3 beds in our market get about $300 more per unit, and are desirable in there aren't enough of them.
If you're gonna hold and refi, I would make it a 3 bed.
I may be just looking at it from a multifamily perspective.
Let me know what you end up doing. You can always go to a banker and ask them what would derive the most value
Investor · Miami, FL · Member since 2015 · 355 posts · 268 votes
2y
This is where real estate can be more art than science. Typically a 3-bed would have a larger living space than a 2-bed as you expect more people in the household. If you have living area to sacrifice, then a 3-bed could make sense. However if your living area is going to be noticeably tight compared to other 3-bed comps then you may want to stick to 2.
Cincinnati, OH · Member since 2020 · 4k+ posts · 3k+ votes
2y
@Michael Roman, I will echo Robert. I have seen groups convert larger 2 beds into 3 beds units, but it really sacrifices the living area and general flow. But, if you are in a more "value" oriented neighborhood, this could work.
Alternatively, on the single family side, I converted what was a 3 bed (granted the third bed was originally the garage) back into a 2 bed. This allowed better flow of the house in general. And while I was able to increase rents substantially, the making the garage a garage again, also involved a full gut remodel of the rest of the house, so the design and newness certainly played a big roll on the rent increase.
Second case study, my wife and I recently bought a flip. 1960's built, four bed 2.5 bath house. She decided to combine two rooms to make a gorgeous master and a "pocket office", versus keeping the 4th bedroom. We think this will create more value than dressing up the existing small master bath and keeping the 4th bedroom.
But all told, it is your market that will dictate what is needed. In your typical value-oriented areas, often times more bedrooms is the better play. In higher end areas, I would argue design, flow of the space, and usability are a bigger driver, so keep it 2 and make it nice.
Real Estate Agent · NJ & NY · Member since 2022 · 98 posts · 53 votes
2y
Robert said it perfectly, compare the sqft and size of what your units living room to others on the market and see if it is similar. If yours is smaller, the larger 2 bedroom will most likely be better