Best ROI studio, 1 bed or 2 bed?

[Julie Petersen]

I'm looking at single family homes to rehab and want to as part of the rehab create a separate space (or two!) to rent out to help offset the mortgage. I'm wondering if anyone knows which size additions make the most sense? For example, is it better to add two small studios as opposed to 2/1 or large 1 bedroom or 2/2. Just wondering in terms of cost to build, which size makes the most sense in terms of ROI. I'm looking in the Portola and Bayview neighborhood areas.

[Jaysen Medhurst]

@Julie Petersen, first and foremost you must determine if your zoning allows you to add additional units on your lot (let's put ADUs aside for the moment). In most cases, the answer will be no, since an area of SFH is usually only zoned for SFH.

Second, the cost of building just a unit or two is very unlikely to be justified by the additional income. 

With that said, 2/1 is the sweet spot for most markets. It draws couples, small families, and roommates. It's also economical on a per-square-foot basis, since an extra bedroom doesn't require much more in terms of mechanicals.