Best way to utilize equity?

[Roger Harrold]

Hello, I am new to RE and have a question that I need answered. I have some equity in my home and am looking for the best way to utilize my money. I currently plan on remodeling the kitchen and bath then renting property out. My question is should I take some of this equity and also add a permitted master bedroom/bath, or is my equity better spent buying another property?

[Michael Seeker]

Hey @Roger Harrold - welcome to BP!

There are so many variables that would be required in order to truly give a good answer to your question.  Just a few main examples are: 

1. What is anticipated additional rental income from added master suite?
2. What is the cost?
3. What is the added value to the property?
4. What other property would you look to purchase instead of adding the suite?
5. What are the anticipated rents from the alternative property?

In the market I invest in, you'd probably pay anywhere from $25K to $50K to add a nice master suite.  You might be able to get a couple hundred dollars extra in rent (maybe $1250 vs. $1000).  Alternatively, you could buy 1-2 more $100K rental homes generating ~$1K each in rental income.  There would be very few situations where it would make sense to add the suite in that market.  I can't say the same for where you are, but hopefully this helps point you in the right direction.