Can adding a bedroom and bathrooms increase a homes value?

[Austin Ralls]

Can adding a bedroom and bathroom without increasing the square footage of the home still increase its value? Or is the only way to increase its value to add sqft? 

I am planning too do padsplits in my current markets and know the best thing to do is add bedrooms and bathrooms but want to know if this will increase my properties overall value for a higher refi amount or if it won't change anything unless I increase the homes sqft along with adding the bedrooms and bathrooms. 

[Travis Main]

Hey Austin,

This question doesn't have a straightforward answer. The appraiser determines the value based on comparable properties (comps) in the area. If similar homes with 4 bedrooms and 2 bathrooms fetch higher prices than 3 bedrooms and 2 bathrooms with the same square footage, then there should be an increase in value.

I agree with Bruce's perspective in many cases. Each situation is unique, so your strategy depends on various factors. If your goal is to maximize rental income, adding a bedroom or bathroom often achieves that. However, if you aim for a higher property value, it hinges on the comparables in your market.

I suggest assessing the project's cost and comparing it to the values of similar properties nearby. If you're investing $10-15k to increase the property's value by the same amount, it might not be worthwhile.

Hope this helps clarify your decision-making process!