Extra Bedrooms: Home Resale Value Boost

Adding an extra bedroom downstairs can increase your home's resale value by 15% to 20% on average. However, the return on investment (ROI) for such a project varies based on location, construction costs, and the quality of materials used. While adding an extra bedroom can be a sound financial decision, it's important to consider the specific circumstances and consult with real estate professionals to make an informed choice.

The cost of adding an extra bedroom

Adding an extra bedroom can be a great way to increase your home's resale value and provide more space for a growing family or guests. However, the cost of adding an extra bedroom can vary depending on several factors, such as the size of the room, the type of addition, and the location.

Cost Factors

The national average cost to add a bedroom to a home is $20,000 to $120,000, with most homeowners spending around $50,000 for a 250 sq. ft. bedroom addition on the first floor. The final cost will depend on whether you are converting an existing space or building a new addition, as well as the room's size and any custom features.

Conversion Costs

Converting an existing space into a bedroom is typically more affordable than building a new addition. The cost to convert a room into a bedroom ranges from $10,000 to $90,000, depending on the size and scope of the project. This includes the cost of framing, drywall, electrical, and other finishing work.

New Addition Costs

Building a new bedroom addition can be more costly, with prices ranging from $20,000 to $160,000 for a ground-floor bedroom. This includes the cost of construction, materials, labor, permits, and any necessary contractors. The cost per square foot for a new addition can be up to $350, depending on the room's size and features.

Other Considerations

When planning to add an extra bedroom, it's important to consider the impact on your home's layout and yard space. Adding a full addition may require sacrificing yard space, while building up to create a second story may be a lengthy and labor-intensive process. It's also essential to obtain the necessary permits and comply with local building codes, which can vary by location.

In summary, adding an extra bedroom can be a significant investment, with costs varying widely depending on the scope of the project. It's important to carefully consider your needs, budget, and the potential impact on your home's resale value before undertaking this type of project.

The return on investment

The cost of adding an extra bedroom can range from $10,000 to $250,000, with the average cost being around $50,000. The price varies depending on whether you are converting existing space or adding a new room. For example, converting an existing space can cost between $2,800 and $34,000, while adding a ground-floor bedroom can cost between $20,000 and $160,000.

To maximise the return on investment, it is important to consider the following factors:

• Location and neighbourhood: The location of your home plays a significant role in the return on investment. Adding an extra bedroom may not be worth the cost if it makes the home substantially different from other homes in the neighbourhood. It is also important to consider the number of bedrooms in other homes in the area. Adding a bedroom may have a higher return on investment if it brings your home in line with the number of bedrooms in comparable homes.
• Size and layout: The size and layout of the extra bedroom can impact its desirability and, consequently, the return on investment. A bedroom that is too small or has poor access may not add much value to the property.
• Square footage: Adding square footage typically increases the value of a home. However, this should be balanced with the potential loss of yard space, as expanding the house may reduce the size of the yard, which could hurt the marketability of the property.
• Features and functionality: Adding an extra bedroom should not compromise highly sought-after features of the home. For example, converting a unique space like a butler's pantry into a bedroom may not add as much value as keeping the unique feature.
• Cost of construction: The cost of construction can impact the return on investment. If the cost of adding the extra bedroom is too high, it may not be recouped in the resale value.

Overall, adding an extra bedroom can be a good investment, but it is important to carefully consider the potential return on investment and how it fits within the context of the home and the local market. Consulting with a real estate agent or expert can help determine if adding an extra bedroom is a wise investment.

How to maximise the value of a bedroom addition

Adding an extra bedroom can increase your home's resale value by 10% to 20%, or $30,000 to $50,000. However, the return on investment (ROI) for a bedroom addition can be as low as 50%. To maximise the value of a bedroom addition, consider the following:

• Convert existing space: Utilise unused spaces such as an attic, basement, or garage. These conversions are generally less expensive since they don't require altering the structure of your house, and may have more DIY potential.
• Avoid building a complete addition: Building a new bedroom as a full addition is often expensive and may result in a low ROI. Consider expanding current rooms or building onto existing spaces instead.
• Don't over-improve: Match the number of bedrooms in other houses on your street. Adding too many bedrooms compared to comparable homes in your area may not yield a good ROI.
• Keep your floor plan in mind: Ensure the new bedroom fits with the flow of your home. Bedrooms should be accessible from common areas, not just from other bedrooms.
• Pull necessary permits: Obtain the required construction, electrical, gas, and plumbing permits. Failing to do so can hurt your home's appraisal value and resale price.
• Get multiple contractor quotes: Get referrals from realtors or satisfied customers, and obtain at least three quotes from general contractors before choosing one.
• Maintain aesthetic consistency: The new bedroom should align with the existing style of your home, both inside and out. Inconsistent additions may result in a smaller amount paid for the added space.
• Consider the location: Assess whether your yard has enough space for a ground-floor addition. A small yard may hurt marketability, as most buyers seek outdoor space.
• Avoid sacrificing valuable space: Avoid eliminating parking spaces, garages, covered patios, or yard areas, especially if your yard is already small.
• Don't add a bedroom at the expense of unique features: Embrace unique features like a reading nook or large pantry. Replacing them with a bedroom may add less value.

The impact on the layout of your home

The impact an extra bedroom can have on the layout of your home is an important consideration when thinking about adding one. If you're adding a bedroom downstairs, you'll need to think about how this will affect the flow of your home. Awkward floor plans can be a turn-off for buyers, so it's crucial to ensure that the new bedroom can be accessed from a common area, like a living room or hallway.

The size of the bedroom also matters. A small bedroom that can barely fit a bed and has no space for a closet may not be desirable to buyers and could even hurt your home's value. Experts recommend ensuring the bedroom has enough space to add value and that it doesn't take away from valuable areas of the home, like parking spaces, garages, covered patios, or yards—especially if your yard is already small.

Another factor to consider is the location of the new bedroom. If the only available spot is right off the kitchen or can only be accessed through another bedroom, it may detract from its appeal and decrease the amount you can recoup from the addition.

Converting existing space is often a more cost-effective way to add a bedroom, and it can also be less disruptive. Options for this include attics, basements, garages, or dividing a larger living space into smaller rooms. However, when converting existing space, it's important to ensure that the room meets the legal requirements for a bedroom, which vary by state but typically include a minimum size of 70 square feet, a window for ventilation and egress in the event of a fire, and a closet.

Building a ground-floor addition or adding a second story are other options for adding a bedroom, but they tend to be more expensive and may require hiring a contractor. These options can also impact your yard space, which could affect the marketability of your home if it results in a small yard or no yard at all.

The impact on the marketability of your home

Adding an extra bedroom downstairs can increase your home's marketability, but several factors should be considered. Firstly, the number of bedrooms is a primary consideration for many home buyers, and an additional bedroom can provide more space and flexibility. This is especially true if the extra bedroom is of a reasonable size and does not compromise the layout or functionality of the home.

However, it is important to note that simply adding more bedrooms may not always increase the resale value. The impact on marketability depends on the local real estate market, neighbourhood desirability, and the specific needs of potential buyers. For example, in some areas, a well-maintained three-bedroom home in a desirable neighbourhood with good schools and amenities may have better resale value than a four or five-bedroom home.

Additionally, the cost of adding an extra bedroom can be significant, ranging from $10,000 to $250,000, depending on the scope of the project. While an extra bedroom can increase the resale value by up to 15% to 20%, the return on investment (ROI) is typically lower, ranging from 50% to 75%. Therefore, it is essential to carefully consider the potential impact on marketability before making any decisions.

Another factor to consider is the layout and functionality of the home. Adding an extra bedroom should not compromise the flow or accessibility of the home. It should be easily accessible from common areas and not affect valuable spaces such as parking, garage, or covered patio areas.

The aesthetics of the added space are also important. The new bedroom should be consistent with the rest of the home, both inside and out, to maximise its marketability.

Finally, it is worth noting that unique features in a home, such as a reading nook or a large pantry, may be more valuable to buyers than an additional bedroom. Therefore, it is essential to carefully weigh the benefits of adding an extra bedroom against the potential loss of these unique features.

In summary, adding an extra bedroom downstairs can increase your home's marketability, but it depends on various factors, including the local market, neighbourhood, buyer needs, cost, layout, aesthetics, and the presence of unique features. Consulting with a real estate agent or expert is advisable to make an informed decision.

Frequently asked questions