Should I Add A Full Bath to A Rehab Flip?

Question

Hey Guys,

I just went into contract on a rehab deal in Jersey City. It's a SFH. 3 Bed, 1.5 bath. The basic #s are 100k purchase price. Renovating cost around 35k. I can sell it for 175k.

The broker suggested I add a full bath on the main floor to increase the value of the house. I would love to hear anyone's opinion on this.

I will tell you now what I'm thinking of doing to determine if it will be worth it. I am planing to get a BPO from an amazing broker I've been dealing with. (Needless to say my BPO guy isn't vested in the deal so he has no reason to "adjust" the value..) I will have him tell me how much more I can get for a 2.5 bath over a 1.5 bath. I will get an estimate from my contractor on cost to add the full bath. If the value goes up significantly more than the cost I will prob go for it.

Any advice is greatly appreciated!

Crystal Smith · Answer

@Moshe Eisenberg I would ask your broker to provide a sales comparable report for everything that's sold within the last 6 months up to one mile from your property.  Have him run the report on all 3+ bedrooms w/ 1 bath.  Then run the report with 3+ bedrooms w/ 2 baths.  All the properties should be about the same size as yours & within no more than one mile away.  Look for a significant difference in the sale prices and Days on Market.  If the difference in price is much larger than the cost to install a new bathroom & they are selling faster then put in the bathroom.

Mike F. · Answer

You will still sell it as a 3/1.5.

Additional bath won't typically increase the value more than the cost of construction, so it will likely be a wash, the contractor will make some more money, you might increase the buyer base a bit, but in the end I don't see any financial gain. If your market is a really strong buyers market then that would be a consideration to make it more marketable.

Most bang for the buck would be adding a bathtub to the 1/2 bath as long as you don't cause a defect to the rest of the home's appeal by doing so. A 3/2 is strong medicine.

Michael Lovell · Answer

A basic full bath in my area costs a minimum of 8-10k. A nice one is 15k . Question is more about space. Can you turn the half bath into a full? How easy is it to adjust layout? Don't take away something a room needs to squeeze it in, but a 2nd bath is a big bonus.

Account Closed · Answer

after you're done with numbers, put yourself in the position of a potential buyer. look at  what your house is competing against with other similar houses. look at the price points of those houses. look at what those houses offer. look at what houses have sold for in that area and what features those houses have. look what houses remain for sale (particularly for a significant time period, if any) and ask yourself what those houses don't have that made them sit/continue to sit....after everything, look at your house, ask yourself that if you were a person looking at houses of your type, costing what yours will cost, would that bathroom make a real difference to you? and if so, how much?...much of these things are subjective.

James Enright · Answer

You should be asking what kind of house is it? Is it a ranch, 1 1/2 story, 2 story or what?Are there any bedrooms on the first floor or all of them on 2nd floor? If all on 2nd floor, then no full bath on 1st floor, just 1/2 bath will do. Also need to look at the layout, if it is possible to do so w/o making it look silly. And yes, look at the cost of construction vs value of surrounding house in comparable square footage.

Moshe Eisenberg · Answer

thanks @Crystal Smith that makes sense.

John Moore · Answer

If you don't compromise the floor plan I would put in the full bath.  This should make it much easier to market..

Manolo D. · Answer

This will put you about $4000-$6000, if you get twice as that, go for it. Ive seen some 4/2 that sold a lot cheaper than 3/2 in the same area, just giving you a heads up.

Should I Add A Full Bath to A Rehab Flip?

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