Adding A Bedroom: Is It Worth The Investment?

Adding an extra bedroom to your home can be a costly endeavour, but it may be worth it if you're looking to increase your property's value. According to real estate experts, the value of a home improvement project is often measured by how much it bumps up the resale price. While most renovations add some value, the amount added is usually less than the cost.

An extra bedroom can increase your home's resale value by 15% on average, but this can vary depending on local factors such as the state of the real estate market, the school district, and the type of home.

The cost of adding a bedroom can range from $6,000 to $200,000, depending on factors like location, size, and whether you're converting existing space or building an addition.

Before embarking on this project, it's essential to consider factors such as how the new bedroom impacts your home's layout, whether it adds square footage, the number of bedrooms in homes in your neighbourhood, and what local buyers are looking for.

ROI is lower than other renovations

Adding a bedroom to a home is a significant home improvement project. It is also one of the most expensive. The return on investment (ROI) of adding a bedroom is generally lower than many other renovations.

The value of a home improvement project is often measured by the amount of money it adds to a home's resale price within the next few years. Most renovations add some value, but in many cases, the amount of value added is far less than the cost. This may be an acceptable trade-off for homeowners who plan on staying in their home for several years and are investing in home improvements that add to their quality of life.

However, if a home is going to be sold within a few years, it is important to weigh the investment against the return value when planning home improvements. Basic home maintenance projects like replacing worn siding or a leaky roof will add more value to a home than an expensive kitchen or bathroom remodel. A minor kitchen remodel can return more than 80% in value, while replacing a front entry door or garage door can return more than 90%.

The cost of adding a room compared to the value it returns to the home depends on several factors, including the home's location and the type of room being added. The top rooms that add value to your home are kitchens and bathrooms. In these rooms, modest changes can have a higher return value than upscale remodels. For example, replacing outdated cabinets and swapping out tile and Formica countertops for granite and quartz are high-ROI improvements.

Homeowners should look at their entire home when considering a major renovation. Experts say that having a new kitchen or master suite that outshines the rest of the house can actually hurt its resale value. Additionally, rooms that are out of proportion to the rest of a home may only appeal to a small set of buyers.

A less expensive way to add a bedroom is by converting or repurposing other spaces in the home, such as attics, basements, bonus rooms, and other unused areas. According to the National Association of Realtors, the national average cost of converting an attic to a bedroom is $75,000, with an average return value of $40,000 (53%).

When deciding on home improvement projects, it is important to consider the total cost of the renovation versus the quality of life it will add, as well as the value it will add to the home. While some homeowners want to maximize ROI, others may prioritize increasing their quality of life. Ultimately, whether a particular renovation is worth the cost and interruption is highly subjective.

Local factors affect value

Local factors play a significant role in determining the value of a property. Here are some ways local factors can affect value:

Comparable Properties ("Comps")

The sale prices of similar homes, or "comps", in your neighbourhood that have been sold recently can be a good indicator of your home's value. Real estate experts often rely on comps to estimate a property's value. Factors to consider when looking for comps include recency of sale, feature similarity (e.g., type of home, year built, number of bedrooms and bathrooms, and square footage), and distance from the property in question.

Location

The location of a property is one of the most important factors for buyers. The desirability of a location depends on various factors, such as proximity to schools, jobs, grocery stores, shopping, entertainment, recreational centres, highways, utility lines, and public transportation. A home in a safe area with good schools and employment opportunities nearby will generally have a higher value.

Local Real Estate Trends and Market Conditions

The state of the local housing market can significantly impact property values. When supply is low and demand is high, home prices tend to increase. Market conditions can also affect how long a property stays on the market. In a seller's market, homes typically sell faster, while in a buyer's market, properties may see longer days on the market, potentially impacting buyer perception.

Renovation Potential and Upgrades

The renovation potential of a property and any upgrades or updates made can affect its value. This factor depends on the preferences of potential buyers. Some buyers may be interested in customising a property and will look for renovation potential, while others may prefer a move-in-ready home. Upgrades such as finished basements, pools, modernised kitchens, additional bathrooms or bedrooms, and outdoor entertainment areas can increase a property's value.

Zoning Regulations

Zoning regulations, which establish local laws for how real property can be used, can directly impact property values. These regulations can protect or influence the value of a home, especially in areas with a growing population and the need for residential expansion.

Converting existing space is cheaper

Converting existing space is a cost-effective way to add value to your home. The cost to convert an existing space into a bedroom depends on its current condition and location. For example, a space that is finished, with existing electrical and a window egress, will cost less to renovate than an unfinished space that may require building out walls, installing ceilings, flooring, and a window.

According to the National Association of Realtors, the national average cost of converting an attic to a bedroom is $75,000, with an average return value of $40,000 (53% ROI). The cost of converting existing space ranges from $6,000 to $50,000. This is a much more affordable option than building a new room, which can cost up to $350 per square foot, with the average cost of a single bedroom addition being just under $50,000.

There are several options for converting existing space into a bedroom:

• Dividing a room: This is one of the most cost-effective ways to add a bedroom. It involves installing a non-load-bearing wall, additional electricity, a closet, and a window. The cost of dividing a room ranges from $3,201 to $10,768.
• Converting unfinished space: The cost of converting unfinished space, such as a basement, attic, or garage, ranges from $6,026 to $75,000. It is important to ensure that the space is easily accessed through a finished area of the home, as an entry in the garage or a pull-down ladder to the attic will not add livable square footage.
• Garages: Converting a garage is a less disruptive option, but experts advise against it if you plan to sell your house soon. Most buyers are looking for a home with a garage for parking or storage.
• Prefabricated rooms: Dropping a prefabricated room onto available yard space is a less disruptive and more affordable option than building a new room.

When deciding whether to convert existing space or build a new room, it is important to consider the impact on your yard size and the resale value of your home. While adding square footage typically increases the value of your home, reducing your yard size too much can hurt its marketability. It is also crucial to ensure that the converted space meets the legal requirements for a bedroom, including lighting, a closet, a window, and at least 70 square feet of floor space.

Adding square footage adds value

Adding square footage to your home is one of the biggest home improvement projects you can undertake. It can be one of the most expensive, too. The return on investment (ROI) of adding a bedroom is generally lower than many other renovations. However, if you're planning to stay in your home for the long term, adding a bedroom can add to your quality of life.

According to a study for the National Association of Realtors, every 1,000 square feet added to a home increases its sale price by at least 30%. The cost of these additions varies widely depending on location and complexity. Nationally, these costs can range from $80 to $250 per square foot.

The rooms that generate the greatest return on investment are bathrooms and bedrooms. Bathroom additions offer the greatest returns, with an average of 86% according to Remodeling magazine. Attic bedrooms, specifically, return a hefty 84% according to US News & World Report.

If you're considering adding a bedroom, it's important to look at your entire home. Experts say that a new kitchen or master suite that outshines the rest of the house can hurt its resale value. Rooms that are out of proportion to the rest of the home may only appeal to a small set of buyers. The best additions look like they were always part of the property or match the existing structure as much as possible.

Before starting any home improvement project, it's important to consider the other houses in your neighborhood. Adding an extra bedroom and bathroom can significantly increase your home's value if your home has fewer of these than comparable houses in the area. On the other hand, overbuilding for the neighborhood could be an expensive venture that doesn't pay off in the end.

If you're planning to sell your home in the near future, smaller, less expensive home improvements may be a better option. Home staging experts recommend spending a more modest amount—$5,000 to $10,000—on fresh paint, new carpet, updated fixtures, doors, and windows, and other general improvements that attract buyers.

A bedroom must meet certain requirements

Adding a bedroom can be one of the most expensive home improvement projects. However, it can also add substantial value to your home. If you're thinking of adding a bedroom, it's important to know the legal requirements for what defines a bedroom to avoid confusion and legal trouble.

Minimum Square Footage

A bedroom must meet the minimum requirements for floor space, which is typically 70 square feet. This ensures that there is enough space for essential bedroom furniture such as a bed and a nightstand.

Minimum Ceiling Height

The ceiling height in a bedroom is also regulated, with at least half of the bedroom ceiling requiring a minimum height of 7 feet. This ensures that there is enough headroom and the space doesn't feel cramped.

Methods of Egress

A bedroom must contain at least one method of egress, which is an emergency exit. This can be in the form of a door that opens to the outside or a window that can be accessed during an emergency.

Minimum Window Size

For a window to be considered a method of egress, it must meet specific size requirements. It should open at least halfway and be at least 24 inches tall and 20 inches wide, with a minimum opening area of 5.7 square feet. The window should also be easily accessible, with a maximum sill height of 44 inches from the floor.

Heating and Cooling

Most states require bedrooms to have heating and cooling elements to maintain a comfortable and safe temperature. This could include a heater, air conditioning, or both, depending on the climate of your location.

Smoke Alarms

Although not always required, it is highly recommended to install smoke alarms in bedrooms for safety reasons.

It's important to note that these requirements may differ slightly depending on your state and local building codes. Be sure to check with your local code enforcement to understand the exact requirements for your area.

Frequently asked questions