How do you add value through rooms and bathrooms?

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I am really curious about how investors analyze a property and the approach you take in order to purchase a property with the vision of adding value through additions of rooms and bathrooms. Like walk me through the thought process as to what kind of square footage you are looking for/what kind of market research you would conduct to see if this is a viable option in your area/how you went about designing it either yourself or through someone else. 

There are various podcast episodes I have listened to for example with Felipe where he would turn a 4 bedroom house with a garage and turn the garage into more bedrooms or section 8 housing where making a 3 bedroom into a 5 bedroom will bring in more cashflow etc. Are there minimum sq footage requirements for a room?/what can you consider a room?/how would you decide financially that it would make sense to break down walls or add walls or run extra electrical wires or plumbing to get out of it more than what you put in monetarily speaking. 

If anyone can either guide me to an informative existing thread or provide insight here I would really appreciate any information on the topic.