Shall I add a 4th bedroom?

[Clint Jusino]

Hello BP family! I recently purchased my 2nd rental property and I plan to BRRRR this one. The rehab should be done this week. I wanted to know if I should make another bedroom where the living room and dining room are located. I feel it would work but am worried it will have 2 doors for that room. So folks that enter the house from the front door and would have to walk through this new bedroom to get to the hallway and access the rest of the house. I have attached a pic for an idea. Let me know if any has done something similar. I was thinking for my future tenant who has 3 in total that the new room can be used as a dining room, game room, etc. It will have a small closet I their to make it an official bedroom

. Thank you.

[Kevin Sobilo]

Quote from @Clint Jusino:

Quote from @Kevin Sobilo:

@Clint Jusino, your property looks too nice for a "walk-thru" bedroom to be any added value. If you were in a low class area, then people who need an extra bedroom will make due, but that looks pretty nice. I can't imagine a tenant for that property using it as a bedroom.

I don't see that it would add appreciable value for the appraisal or for rent, AND when you go to re-sell you would probably want to tear all that work out and put it back how it is now as your typical buyer is probably an owner-occupant and would prefer it as it is now.

I have actually REMOVED bedrooms during rehabs to make the end result more desirable turning 3 bedroom units into 2 bedroom to make them more desirable. 

Thanks Kevin for your thoughts and honest feedback. My rehab is almost complete. the house is currently a 3bd 1.5 bath. The comps show for that around 265k. If I made it into a 4bdrm 2 bath the comps go up to 295k. That is why I was asking. Trying to get the highest ARV as possible to grab as much cash out as I can. 

I don't think the appraisal will jump $30k like you believe because this isn't a good bedroom. A walk-thru bedroom is functionally-obsolete. In modern houses they aren't desirable. Appraisers make decisions and use their own discretion. So, an honest appraiser won't value it based just on the high level numbers you are looking at.

Here is a different example. MANY years ago some modest houses were built with LOW ceiling heights below 7'. If you just looked at comps you would think a certain value based on square footage, bedrooms, etc. However, modern appraisal practices require that these spaces with low ceiling height be valued LOWER similar to how a finished basement is valued.

Perhaps call and ask an appraiser, maybe I'm wrong. You could even ask them to do a limited scope appraisal where they generate a light appraisal without a site visit and usually for about half the price.