How to increase a property's value by adding an extra bedroom
Monday, 12 August 2024
Adding an extra bedroom for increased value
Adding an extra bedroom to your property is a crucial step for anyone looking to successfully implement a BRRRR strategy. Why? Because an extra bedroom is the quickest and most cost-effective way to boost both the value and cash flow of a property. This is why the question “how do I add an extra bedroom” is often asked by those considering or actively engaging in renovation-based strategies.
However, not every house has the potential to be reconfigured for an additional bedroom. In this article, we’ll take you through a step-by-step guide on how to add an extra bedroom, starting from the very beginning, and what to consider even before you visit an open home.
How big does the house need to be to fit another bedroom?
Most houses built between 1960 and 1980 have surplus floor space that could be turned into a bedroom without making it too obvious. Often, this could be a separate dining room or an oversized kitchen.
Before you start searching for houses, it’s essential to find a property with a large enough floor plan to add an extra bedroom. Here are the minimum sizes to look for:
- To convert a 2-bedroom into a 3-bedroom property, you’ll want a minimum of 80 square metres.
- To convert a 3-bedroom property into a 4-bedroom property, aim for at least 95 square metres.
- To convert a 4-bedroom property into a 5-bedroom property, you’ll need a minimum of 120 square metres.
For example, take a typical 3-bedroom house from the 1970s. If you find one with a floor plan between 90 to 95 square metres (and there are many), there’s a good chance you can add an extra bedroom.
Note: Sometimes, you might be able to squeeze in an extra bedroom in a slightly smaller house, but generally, these are the sizes you should be aiming for.
Where to place the extra bedroom
Most of the time, you’ll find extra space in the formal dining area, which is often an existing separate room that can easily be transformed into a bedroom.
When browsing properties online, such as on Trade Me or Realestate.co.nz, many listings in larger cities like Auckland and Hamilton include floor plans. This allows you to start filtering out unsuitable properties without leaving your home.
The next step is to examine these floor plans to identify a spot where you could place the extra bedroom. Keep in mind that any additional bedroom should be a minimum of 7 to 8 square metres, including a wardrobe. Anything smaller will feel more like a study than a legitimate double bedroom. Without a wardrobe, it won’t be recognised by tenants and valuers as a true extra bedroom.
If the room feels more like a study, it won’t add as much value or rental potential to the property.
What about flow? Is a bedroom between a kitchen and dining room awkward?
It’s understandable to worry about how chopping out a dining room might affect the flow of the property, creating an awkward hallway from the kitchen to the lounge or something similar.
Here are three things to keep in mind:
- Sometimes, it’s obvious where the extra bedroom should go, but other times it’s not.
- Every property is unique, and you need to be creative. Don’t think about adding the extra bedroom in isolation. If it disrupts the flow, how can you adapt the rest of the property to make the additional bedroom feel natural? For example, in one renovation I did in Hamilton, I converted the kitchen into a bedroom. To compensate, I turned the lounge into an open-plan kitchen/living area.
- Consider your tenants. In wealthier areas, it might feel strange to have a bedroom directly off a lounge. However, in lower socio-economic areas, it’s more important to maximise the number of bedrooms than to worry about the flow. Just make sure the living areas remain usable, as adding a bedroom means more tenants, and they still need enough space to live comfortably.
The key is not to turn the property into a dive if you want good rent and a valuable house.
How to add a wall for the extra bedroom
To create the extra bedroom, you’ll likely need to put in a cosmetic wall to separate the spaces. For a dining-room-to-bedroom conversion, which is the most common, you’ll need a Licensed Building Practitioner. The whole project can take about a week in summer, but colder weather and rain in winter might extend it to two weeks.
Common mistakes when adding an extra bedroom
I’ve seen some poor renovations where investors have gone wrong when adding an extra bedroom, often first-timers who thought they could “just bang up an extra wall” without fully thinking it through or seeking advice from a renovation coach. Here are the three things you need to think about:
- Don’t force it. The main rule for any renovation is: don’t force anything that doesn’t work for the people living in the house. If it doesn’t feel organic or natural to the floor plan, don’t do it. For example, I’ve seen someone try to convert a tiny one-bedroom unit into a two-bedroom by putting a partitioning wall in the middle of a 12-square-metre bedroom. Each side of the room could only fit a single bed, which might work for young children but not for adults. Additionally, consider windowsills. Many dining rooms and lounges have larger windows extending closer to the ground. Bedroom windows typically don’t extend that low, so you may need to replace these windows to make the room feel right. The bottom line is: don’t force something just for the sake of it. Make sure the tenant will like it, and it fits the floor plan. Working with a renovation coach can help ensure the space doesn’t feel contrived.
- Do it properly. Moving walls is easy if they aren’t load-bearing, but you absolutely need to get a licensed builder to ensure you aren’t compromising the building’s structural integrity. Unconsented work can get you into trouble with the council and negatively impact the property’s resale value. Bring in professionals to validate the plans for any wall movements.
- Consider the impact of extra tenants. Adding an extra bedroom increases the number of people living in the house, which can affect amenities like bathrooms or parking spaces. For example, a two- to three-bedroom conversion might still work with one bathroom, but increasing the bedroom count from three to four, or four to five, might require an additional bathroom, or at least another toilet, which will require building consent. Additionally, each council may have minimum parking requirements.
How much will adding an extra bedroom cost?
The most cost-effective way to add a bedroom is to convert a dining room, which should cost about $7,000 to $8,000. This includes the licensed building practitioner, painter, jib stopper, and electrician. The project should take about one to two weeks to complete, and you can generally expect to recoup the cost through increased rent within the first year.
If you’re considering converting a kitchen, be aware that moving plumbing and pipes will add to the cost, so if possible, leave the pipes alone.
Should you always add an extra bedroom?
Adding an extra bedroom is the number one strategy we use to add value to properties and increase rent. It’s a compulsory part of our six-step cashflow hacking process, and I won’t let the investors I coach buy a property unless they can find a way to add an extra bedroom.
However, it’s up to you as the investor to conduct due diligence and make sure that whatever value you’re adding to the property has been thoroughly scrutinised and is appropriate before committing to the purchase.
Cashflow Hacking Principles
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