Is improving an attic or basement worthwhile?

Question

I'm evaluating a potential BRRRR property. It's a single-family, one-bedroom bungalow-style home.

The attic is fairly spacious and could certainly be converted to bedroom space. I'm wondering - are there specific requirements for converting it so that it's counted as a bedroom in an appraisal?

Also, the basement is unfinished, however it does have a washer/dryer and drop sink. Would there be any value in tiling and/or putting up drywall? It's worth noting that the water heater and furnace aren't walled off.

Should I consider either for a higher refi appraisal? Is there anything else I should consider?

Whitney Hutten · Answer

@Scott Krause Potentially, you can capture some equity in completing the basement or attic, but I agree with Andrew, you have to know what the competition is doing. Also, understand your local dynamics.  If basements are prone to flooding in your area, I wouldn't do it.  Look to push value in other ways.

Andrew Postell · Answer

@Scott Krause this is highly dependent on what the comparable properties show in the area of the property.  For example, in Texas it is common in some neighborhoods to enclose the garage. This would give more square footage to the property.  So why don't we enclose every garage of every home?  Because in some neighborhoods the garage is expected. The same will ring true here for attics and basements.  What do your comps show?  If you have comparable properties that have the features that you are thinking of then you can analyze the cost of such things and analyze it if it's worth doing.  I hope that all makes sense.