Bedroom to bathroom/closet a good investment?

6 Replies

We (my wife and I) own a 3 bed 1 bath rental with a livingroom and a den. Its about 1500 sqft and we are thinking of converting the smallest bedroom into a bathroom and making the den into the master bedroom. The home is on a crawlspace and the other bathroom shares a wall so plumbing wouldn't be too difficult but we are wondering what type of return we would be looking at for the property value. We understand that it is a rental and we are not in this for appreciation but this house is a rent to own for us and we will need to get a conventional mortgage next year so the added value would definitely help. Any insight would be appreciated.

Howdy Curtis!

The presence of an additional bathroom in the home will likely "jump" the appraisal value significantly more than the loss of a bedroom decreases it. For example, a home I recently refinanced appraised at $70,000 as a 2 bed, 1 bath, but $80,000 as a 2/2. In my market I would anticipate the loss of a bedroom to reduce the value around $4,000, so I still would have come out ahead. The cost of the added bathroom came up to $3,000 over a crawlspace foundation, so I would have seen a $1,000 gain in the appraisal. Nothing to "write home to mamma" about, but it's a nice 25% ROI project.

I hope that adds value!


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