Build an addition or keep money?

[Will Foster]

Hello BPers. Mu question today is, should I build a much needed master bedroom to the home I recently bought, or keep my money for future real estae purcheses?

Here is the scenario: I bought my first home in Colorado, a small, 866 Sq Ft house, with a large lot. My idea was to build a new master bedroom, then rent or AirBnb the other bedroom, in order to cut down my mortgage cost, basically house hacking.

If I build the addition, then my home's value and equity increases very quickly, and in two years I was going to refinance and pull out the money I spent on the addition, and buy my next rental property.

Or is it smarter to not spend that money on the addition, use it to rehab other areas of the house, keep it growing, have money in the bank, and then in two years use it to buy my next place.

I say two years, because I'm going to be getting a new job next year, and will have to be employed for two years before I can apply for my next home loan.

Thanks in advance for all your thoughts and ideas

Will

[Tyler Work]

@Will Foster I think it depends on a bunch of factors but usually entire home additions (new construction) aren't cheap. You might get a higher return on your investment with a rental rehab so you can start doing the BRRR but it really depends on which scenario yields the highest returns.