Extra Bedroom, Extra Value: How Fifth Rooms Impact Property Prices

Adding an extra bedroom can be a great way to increase the value of your home, but it's not always a straightforward process and there are several factors to consider. The return on investment (ROI) for adding a bedroom can vary depending on the size of the room, the location of your property, the local real estate market, and whether the addition of a bedroom affects the overall square footage of your home.

In terms of recouping costs, adding a bedroom typically has a better ROI than other home improvement projects, with an average ROI of 53-75%. However, the cost of adding a bedroom can range from $10,000 to $250,000, depending on the type of addition or conversion.

When it comes to the impact on resale value, a fifth bedroom may not always be the best option. In some cases, having a four-bedroom home with a flex space or office space may be more valuable than a five-bedroom home, especially if the additional bedroom reduces the size of the other rooms. It's also important to consider the norm in your neighbourhood—if most homes in the area have three or four bedrooms, adding a fifth bedroom may not yield a good ROI.

Additionally, the appraisal value of your home may not increase significantly with the addition of a bedroom unless it comes in the form of additional square footage.

Therefore, while adding a fifth bedroom can potentially increase the value of your home, it's important to carefully consider the specific circumstances and seek advice from a local real estate agent or expert.

The cost of adding a fifth bedroom

Adding a fifth bedroom to your home can be a costly endeavour, and the price will depend on a variety of factors. The average cost of adding a bedroom and bathroom is $35,000 to $84,000, but this can increase to $200,000 if you're planning to expand the house. In the Bay Area, the cost is even higher, with the average home addition costing around $350-$500 per square foot.

If you're converting an existing space, such as a bonus room or office, into a bedroom, the cost could be as low as $2,800. However, if you need to renovate an unfinished space, like a basement or attic, the cost can range from $2,800 to $34,000. Adding a loft bedroom is another option, with costs ranging from $12,000 to $50,000, depending on the structure and whether you need to add a staircase or rebuild walls.

Keep in mind that the cost of materials and labour can vary depending on your location. Additionally, you may need to hire a variety of professionals, such as electricians, plumbers, construction workers, and decorators, which will add to the overall cost.

When considering the cost of adding a fifth bedroom, it's important to weigh the potential resale value it may add to your home. In most cases, an extra bedroom can increase the resale value by $30,000 to $50,000, or by about 15% on average. However, this can vary depending on the location, existing property value, and the demand for larger homes in the area.

The return on investment (ROI)

Adding a fifth bedroom to a house can be a costly endeavour, and the return on investment (ROI) depends on a variety of factors. The location of the property, the local real estate market, the neighbourhood desirability, and the specific needs of potential buyers all play a crucial role in determining the ROI.

In general, adding a bedroom can increase the resale value of a house by $30,000 to $50,000 per bedroom, or by about 15% to 20% on average. However, this estimate varies based on the property's location and the existing value. The cost of adding a bedroom can range from $10,000 to $250,000, with ground-floor additions being the most expensive option.

When considering the ROI of adding a fifth bedroom, it's important to keep in mind the potential impact on the property's value. If the addition of the bedroom doesn't increase the square footage significantly, it may not have a substantial effect on the resale value. Additionally, if the house is in a neighbourhood where most homes have three or four bedrooms, adding a fifth bedroom may not yield a high ROI.

To maximise the ROI, it's recommended to avoid building a complete addition and instead opt for converting existing spaces, such as basements or attics, into bedrooms. This option is generally less expensive and can provide a good return. It's also important to consider the local market and the needs of potential buyers. If the house is in a family neighbourhood, adding a bedroom to a property with a large square footage but only two bedrooms can result in a higher ROI.

Furthermore, unique features such as a reading nook or a large pantry should be preserved, as sacrificing these for an additional bedroom may not lead to a higher resale value. The flow of the floor plan should also be taken into account, ensuring that the new bedroom can be accessed from common areas.

In summary, the ROI of adding a fifth bedroom depends on various factors, including location, market conditions, neighbourhood desirability, and the specific needs of potential buyers. While adding a bedroom can increase resale value, the costs of the project should be carefully considered, and it's recommended to consult with a local real estate agent to make an informed decision.

The impact on the layout of the house

Adding a fifth bedroom to a house can impact the layout in several ways. Here are some key considerations:

Space and Square Footage

The addition of a bedroom can affect the available space and square footage of the house. If the new bedroom is created by converting existing space, such as an attic, basement, or bonus room, it may not significantly impact the layout. However, if a new room is built onto the ground floor or a second story is added, the layout of the house will be altered.

Yard Space

Adding a ground-floor bedroom or expanding the second story can reduce yard space, which could impact the marketability of the property. Buyers often value outdoor space, and a smaller yard may detract from the overall appeal of the home.

Flow and Functionality

When adding a bedroom, it is essential to consider the flow and functionality of the house. Awkward layouts or bedrooms that can only be accessed through other bedrooms can be unappealing to potential buyers. Ensuring that the new bedroom is accessible from common areas, such as living rooms or hallways, is crucial.

Compliance with Building Codes and Regulations

Depending on the location, there may be specific building codes and regulations that must be met for the new bedroom to be considered legal. Factors such as square footage, ceiling height, the presence of a window, and the number of egress points may come into play. Ensuring compliance with these regulations can impact the layout design.

Impact on Existing Features

Adding a fifth bedroom may involve sacrificing unique features of the house, such as a reading nook or a large pantry. Removing these features could impact the overall appeal of the property. It is important to consider the balance between the number of bedrooms and the preservation of desirable features.

Comparability with Neighbourhood Homes

The number of bedrooms in neighbouring homes can also influence the layout decisions. Adding a fifth bedroom in an area where most houses have three or four bedrooms may make it challenging to find comparable homes for pricing and could potentially impact the resale value.

The number of bedrooms in the local area

The number of bedrooms in your local area can have a significant impact on the value of your property. It is crucial to understand the demand and demographics of potential buyers in your neighbourhood. For instance, if your home is in a family-oriented area with larger households, adding an extra bedroom could be advantageous. Conversely, in an area with smaller households or senior housing, a different approach may be more suitable.

Comparing your property to similar homes in the vicinity, or "comps", is essential. If most houses in your neighbourhood have three or four bedrooms, adding a fifth bedroom may not yield a favourable return on investment. However, if five-bedroom homes are the norm in your area, adding an extra bedroom could help your property align with local standards and potentially increase its value.

It is also worth noting that simply increasing the number of bedrooms may not always be the best strategy. The size and layout of the bedrooms, the presence of other amenities, and the overall condition of your property are all factors that contribute to its marketability. Additionally, consider the potential impact on your yard space when adding bedrooms, as properties with smaller yards can be more challenging to market.

Consulting with a trusted local real estate agent or expert is advisable to gain insights into your specific market and make an informed decision about adding a fifth bedroom. They can provide valuable data and guidance on what improvements are most suitable for your area.

The impact on square footage

The impact of adding a fifth bedroom on the square footage of a house can be significant, but it depends on various factors, including the existing layout, local building codes, and the desired functionality of the new space. Here are some key considerations regarding the impact on square footage:

• Legal Requirements: To be considered a legal bedroom, a room typically needs to meet specific criteria. In most states, a bedroom must have a minimum size of 70 square feet, adequate ventilation, and egress in case of emergencies. Some states also have requirements for closet space and window size. It's important to consult local building codes before proceeding with any renovations.
• Layout Considerations: Adding a fifth bedroom can impact the layout and flow of the house. If the new bedroom is created by dividing an existing large room, it will reduce the square footage of the original space. On the other hand, if it involves converting an unused area like an attic or basement, it may not significantly impact the overall square footage but can provide additional functionality.
• Cost Implications: The cost of adding a fifth bedroom depends on the scope of the project. Converting existing spaces, such as a bonus room or office, into a bedroom is typically more affordable, with costs ranging from $2,800 to $34,000. In contrast, expanding the house's footprint by building an addition or adding a second story can be significantly more expensive, ranging from $10,000 to $200,000 or more.
• Market Comparison: The impact of a fifth bedroom on square footage can depend on the surrounding real estate market. If most homes in the area have three or four bedrooms, adding a fifth bedroom might not yield a proportionate increase in value. In contrast, if larger homes with five or more bedrooms are common in the neighbourhood, adding the extra bedroom could help maintain competitiveness in the market.
• Functionality and Design: The functionality and design of the fifth bedroom can impact its appeal to potential buyers. Simply adding a small bedroom may not be as desirable as creating a spacious and comfortable space. Additionally, ensuring the house still flows naturally and that the addition complements the existing layout can be crucial.
• Impact on Yard Space: If the fifth bedroom addition involves building an addition on the ground floor, it will reduce the size of the yard. This can be a trade-off that potential buyers consider, as more square footage in the house may come at the cost of a smaller outdoor area.

Frequently asked questions