Optional rehab beyond 80%LTV… and baseboard heating

[Bethany Shipman]

Hi! Husband and I are attempting our first BRRRR on a duplex. Offer is accepted, 55k, about 30K rehab and ARV 110. My question is, if my final loan will be for 80% max but we found a couple other things that could be added easily- namely, adding a bedroom to the 1bed/1bath side and reinstalling central air (and heat? currently has baseboard heating and window AC units), should we do those things even if it puts us over? Seems like we would recoup cost quickly on the bedroom for sure, as we can raise rent on that side… but not sure on the AC especially. It's interesting to know that the house previously had central HVAC, so ductwork is already in place (perhaps just needs cleaned?).

Another note is that this isn't a true BRRRR in that my lender doesn't cash-out refinance (we're doing a construction style loan). So I wouldn't be getting any capital back out immediately anyway. Plan is to do a cash out refinance in a year or so.

Would you add the extra bedroom (maybe $3-5k) and the central HVAC ($8k-12k) If they weren’t in the original budget? ALSO would you bother with forced air heating or do people like electric baseboard heating just fine?