Should I add a second story?

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I’m buying my first rental that needs some work done before renting it out. It’s a small (just shy of 700 sq ft) 2bd/1ba that has layout that leaves a lot to be desired. There’s not a whole lot I can do to change the layout, except opening the kitchen to the living room, and cleaning up the 2 small rooms. That got me thinking.....

What if I add a second story onto the top of this to a) double the livable sq feet. B) turn it into a 3bd/2ba, therefore play to a much larger market both in rental and resell. I realize this is a huge project that would take much more capital than initially intended, but I was curious is anyone has approached this angle before. Pros, cons?

I don't remember what guest and I'm not a podcast junkie, but there was someone demoing down to the basement and then re building up.  This was happening in an area with much higher valuations on properties, I think in NE.  What value/comps are you estimating for your project?  I can't imagine being less than ~$60k on something like you're describing even with actively managing it and a bunch of DIY to save money.  So if you're not getting to at least a $150k asset at end of it, I just don't see it.  

What will be make or break feasibility wise for what you're proposing will be:

  • Existing studs - nowadays max 16" O.C. spacing for 2x4 studs on 1st floor is required to carry a 2nd story and roof per 2015 IRC.
  • Your existing truss system would save you a lot of $$$ if you can re-use.  In either case it would be a large challenge but pre engineered trusses (vs stick/field built) wuold give you best chance of pulling this off.
  • Systems routing: you'll need a cost effective route ti get electrical, plumbing, and hvac up to 2nd floor and perhaps attic depending on 2nd floor layout.  You'll just about certainly need to upsize central AC and furnace/blower, and change up ducting a bit
  • To kind of piggy back on all the above, and I'm biased as an engineer - if I were you I'd be wanting a good set of plans to even try this.  This means A/E plans, etc
  • Jurisdictionally the proper time to engage the AHJ I believe would be after you front loaded a lot of the front end feasibility/design to demonstrate you're serious.  I don't see any way to completely eliminate the chance that your AHJ or inspector would just torpedo the whole thing.
  • Routing of your electrical stuff would involve likely either building a chase, or demoing something on the first floor.  If you're skilled you *may* be able to extend something up from the existing attic but all the j-boxes are supposed to be accessible and just tracing out circuits to accomplish this would be easier said than done.
  • I think my estimate is off, after I read and think through this.  I'd budget at least $80k, and at some point honestly you cross over to where you could buy a bigger house for less money, that needs more work.... And do more demo and just do it all.  Or, build new.  You're not too far off from this route money wise per a lot of the costs for above.