Would you make a 4 bd a 3 bd?

[Eric Armstrong]

What would you do?? Rehabbing a home that is 4 bd 3 ba 1250 sq ft ranch home. Home has finished basement w/out egress that would add about 1000 sq ft living space and additional bedroom but only 1/2 can be counted. Master bedroom is only 12x11ish and bedroom next to it is 8x8. Would you take wall out to make master about 20x11 and drop down to 3bd/3ba or leave as is? If dropped to to a 3/3, not sure if it will appraise for what we are looking to get. Not in budget to add egress.

[J Scott]

You need to run multiple rehab/resale scenarios to determine what makes sense for this particular house in your particular market. For example, perhaps you determine there are four potential rehab scenarios that make sense:

1. Cosmetic remodel w/o finishing basement

2. Cosmetic remodel w/finishing basement

3. Removing bedroom w/o finishing basement

4. Removing bedroom w/finishing basement

Now, for each, you can assign a rehab estimate and an ARV. Using those rehab estimates and ARVs, you can determine the potential profit for each scenario. Finally, you weigh the potential profit in each scenario with the amount of work/risk involved, and decide what the optimal rehab scenario is.

In reality, you should be running dozens of potential scenarios (not just four), but you get the idea...