Should I Convert Loft to a 3rd Bedroom

[Brian Pecyna]

I own a 2 bedroom, 2.5 bathroom townhouse in south Aurora IL near Naperville. I am currently having the kitchen rebuilt (insurance claim) and first floor flooring, and then it will officially be our first rental. The plan is to list it as a mid-term furnished rental (most likely on furnished finder).  Since purchasing in late 2021 I have had it in the back of my head to convert the upstairs loft which overlooks the living room into a 3rd bedroom. The loft is about the size of the other secondary bedroom and I have heard that adding bedrooms is one of the higher roi renovations. I have two questions: 

1. What are the best materials for a mid-tier rental? It is a nice townhouse but by no means luxury. I have heard LVP (luxury vinyl plank) for flooring and quarts countertops and full wood cabinets for kitchens?  Does this check out? I have a little under 30k as a budget. Looking for durability and aesthetics. 

2. Opinions on converting the loft to a 3rd bedroom? this would consist of knocking down some stair railing, putting up drywall, door, and building out a closet with the current square footage. Windows and outlets already appear adequate. Is it worth it?  I have yet to get a quote but from conversations appears to be a few grand. I am looking to hire out the project. This would also be the time to do it as it is currently vacant. Curious on if you'd typically need a permit/approval for such a project from the city? I know there are other townhouses with three bedrooms in the same hoa. 

Thanks in advance for any advice.