What to do with partially finished, walk up attic?

[Ashly B.]

Yesterday one of our tenants notified us she'd be moving mid-July. The unit is a large second floor 1 bedroom and is the only unit that has access to the attic. The attic has stairs going up and is approximately 500 sq ft, partially finished, high ceilings (not those sloped ones you hit your head on when you get too close to the wall!). Currently, its empty and stays closed off. We've tossed around the idea of turning it into a studio unit or adding living space for the unit below by creating a master suite - budget option would be to just do a bedroom with a large closet. To meet code I do believe we'd need to alter the stairs because the grade is too steep and our county requires a rental certificate that is reinspected every 2 years. 

I'd guess, with the stair reconstruction, finishing it off, adding a bathroom, we could easily spend $20k. With no bath, maybe $10-12k? Unit was previously rented for $475 but its under market and we're also going to update the kitchen and bath. New rent should be $650 without the attic... if I could make it a 2 br, it could go for $900 even without the second bath. 

What considerations would you have before taking on a project like this? Worth it or leave it as is?

[Ellie Hanson]

You might check code to see if the stairs really need to be done since they are existing. I'd say go for it since you're holding long term. I like to keep a variety of sizes of rentals so I have something to offer all tenants at various price points. For example, currently we have a 1 bed, a 2 bed, a 3 bed and two 4 beds.