Investor · Newport, RI · Member since 2014 · 4 posts · 2 votes
Purchased a single family 2.5 story in a desireable historical district close to a downtown waterfront community. It will be a conversion to a 2 family for a long term buy and hold. The demographic is professional couples, military couples, or students. Please advise on whether it would make sense to add an extension to the house to provide a second bdr to the first floor unit (700 sq ft extended to 900 sq ft) at cost of 25 to 30k. The upper apt. Will have a second bdr in the loft.
Involved In Real Estate · Tampa, FL · Member since 2015 · 15 posts · 1 vote
11y
Deb, it really depends on your market activity. If you find comparable properties with similar square footage, features, bedrooms/bathrooms that are renting for a price that you find acceptable as an investor, then the investment to improve your property might be worth it.
Real Estate Investor · Forest Grove, OR · Member since 2012 · 105 posts · 37 votes
11y
It's really a math equation here Deb, but we're missing a piece of the info, and that is what you can reasonably expect to gain in rent from having the extra bedroom. Then you have to look at how long it is to get a return on the investment, vs your long-term plans, and decide for yourself if it's worth the upgrade.
For example, lets say that it costs you 30k, and you can get an extra $400 per month for it. Your break-even point is 6.25 years on the investment of 30k before you see a positive return. Now, that doesn't take into account any equity you've added, which may make up for some of that 30k, but only if you were to sell at some point.