Frazier Park, CA · Member since 2016 · 5 posts · 1 vote
I'll start by saying I'm very new to real estate, I'm looking into doing a live in flip in my area and there is a 1bd 1ba that can use some basic updating. But my question is;
would it be worth adding a bedroom?
I mean fully expanding the house. I know thats a big project for a beginner, but there is a big gap in price and days on market between 1 and 2 bedroom houses. I'm mostly just curious,
What's the typical price range for such a project?
I Know it depends a lot on area, the contractor, permits, and a lot of other factors. I'm just looking for a ballpark figure, nothing super special, just best/ worst case scenario, and to expand my knowledge on the subject. Has anyone has done something similar successfully or unsuccessfully?
If it helps my area is Frazier Park, CA it's in Kern county, south of Bakersfield, CA
Rehabber/Contractor/Business Manager · Atlanta, GA · Member since 2015 · 140 posts · 70 votes
8y
Hi @Ryan Randalls, although I cannot speak to your specific area, but in Atlanta I pay around $125 per sq ft for an addition. If the numbers make sense, considering the extra time, loan interest if applicable, permits, etc, then I think it is worth it. If I can make the same ROI on not doing an addition, then I will. If I can increase my ROI by adding, if the area shows comps to support it, I will. And is this market, you kind of need to add value in my opinion.
There are a lot more twists and turns with an addition and I would not advise it for someone who is new, gets stressed easily, has low patience or a lack of capital.
Rehabber/Contractor/Business Manager · Atlanta, GA · Member since 2015 · 140 posts · 70 votes
8y
Hi @Ryan Randalls, although I cannot speak to your specific area, but in Atlanta I pay around $125 per sq ft for an addition. If the numbers make sense, considering the extra time, loan interest if applicable, permits, etc, then I think it is worth it. If I can make the same ROI on not doing an addition, then I will. If I can increase my ROI by adding, if the area shows comps to support it, I will. And is this market, you kind of need to add value in my opinion.
There are a lot more twists and turns with an addition and I would not advise it for someone who is new, gets stressed easily, has low patience or a lack of capital.
Investor · Bakersfield, CA · Member since 2015 · 483 posts · 234 votes
8y
Ryan Randalls congrats on starting your investing journey. I think you bring up a good question. If the days on market and the price points vary widely I would definitely look at expanding.
Something to look at is the contractor like you mentioned because some contractors can say they know how to do additions like this and come back and keep adding expenses which can turn upside down really quickly. On the other hand, contractors that are worth their salt normally cost a pretty penny.
At the end of the day, it all comes down to the numbers and your risk tolerance. If the numbers truly do work better with an addition then doing your homework on what Frazier park requires for additions and what’s parts of the process your contractor will take care or are a good thing to look at. Just make sure that there is enough room in the numbers for some overage because there will be an overage.
Best of luck! If you would like to chat further feel free to PM me.
Thanks
Sunny
Real Estate Agent · Alpharetta, GA · Member since 2017 · 85 posts · 30 votes
8y
@Ryan Randalls - I don't have intimate knowledge of your market so take that into consideration. Having said that, my partners and I have a blueprint for adding value. We generally try and find 2/1s and make them 3/2s. We open everything up, add about 800 sq ft and a very nice master suite. It's worked for us hundreds of times. Basically there is more demand for 3/2s over 2/1s so it usually justifies the added expense. It actually minimizes our risk because it broadens our market. This is obviously very simplified and not specific to your situation, but if the numbers make sense. Then by all means, go for it.
I would exercise extreme caution as a new investor regarding adding on to a house. Converting existing space is much less costly, stressful, time consuming, etc. I have done additions (added a full second story), but we did all the work ourselves (in construction for 30 years), and it really takes some patience and time, not to mention funds - especially on those old houses up here. Also, be very diligent about finding a contractor if you are going to use one, and as @Sanjeev Advani indicates above, make sure you add in overages and do your homework. Also, I would find out the process required by the Kern County Building Department before you even look at taking the project on. Sometimes you find that there are special circumstances (zoning/previous work done, etc) for additions , or these rural areas - Frazier has properties that have some questionable construction-lots of illegal conversions and additions that you will be accountable for bringing up to code once you own it. It would be a hard knock to find out half way through. All that said, because the Mountain Communities have properties at reasonable prices, there is certainly money to be made once you get in the flow!