Finishing Up First Live In BRRRR. Should We Add Another Bathroom?

Question

Hi everyone, my fiancé and I are just finishing up our first live in BRRRR. We already have a family that would like to rent out our home, but they are also willing to wait until February to move in. We completely rehabbed our house including remodeling the bathroom and kitchen. We feel we've done enough to be able to refinance and get all the money we put in back out for the purchase of our next house and live in BRRRR. But we still have some money left in savings. Should we use the money to add another bathroom and hopefully add more equity for us to access when we do our cash out refi? Or should we be satisfied with the work we've already done and keep the money in our savings to go towards the purchase and rehab of our next house? We currently have a 3bed 1bath. I've checked comparable houses in the area and homes around the same sqft that have 3beds 2baths are selling for around $20k-$60k more than the 3beds 1 bath depending on if rehabbed or not.

Could some of you more experienced investors please give us your opinions on what you think we should do? Thank you in advance!

Carson P. · Answer

If you can add another bathroom for under 10k, it seems like a no brainer to me based on raising ARV 20-60k.  That’s 100% ROI. Just make sure your comps are good.

Account Closed · Answer

The only way to know is to do spreadsheets and see where your money will make the best return. I am a contractor and find it hard to believe anyone can add a bathroom for less than $30,000 even if you are adding it to a room already inside the house. I charge my customer not one penny less than $18,000 to remodel an existing bathroom. When adding a bathroom you need water piping, drain and sewer pipes, drain vents through the roof, a window, electrical work including a ceiling fan with a humidistat, drywall, painting, plumbing fixtures permits, and the rest of the list is too much to write.

The big question is; can you get a better return by using the money toward purchasing another property, or blow the money on a bathroom that give you a smaller overall return and miss out on the opportunity to be making tons of money from appreciation from two properties.

Personally, I never ever wanted to purchase a property and try to add value to the property by adding more living space or a bathroom and I don't think the amount the property appreciates with the addition of a bathroom will make a significant difference where a bank loans you a higher amount against the property. Not significantly enough for my business model and time.

Anthony Grant · Answer

Thanks for your response. We’re just  trying to decide if we should be moving on to our next property or try to add more value to this one. But your response helps us understand we’d probably be better off by adding more value that we can use on the next property when we’re. Thank you again for your time.