Home renovations - add a bedroom or bathroom

[Ryan Wydler]

Good Evening fellow Financial Freedom seekers and Real Estate Enthusiasts,

I have heard Brandon talk about looking for "hidden value" in his rental properties such as finding a home with more than 1,000 sq ft because he knows he can likely convert some part of the property into an extra bedroom (maybe going from a large 2 bedroom 1 bath house to a good size 3 bed 1 bath).

My market (Richmond, VA) seems to have a lot of 3 bed/ 1 baths available at a modest asking price with the asking price hiking up nearly $25,000 in some cases for the coveted 3 bed/ 2 bath layout.

I'm curious, in general, what does the Bigger Pockets community think of converting a 3/1 into a 2 bed / 2 bath layout? Anyone who has done substantial renovations, what does the process entail? is it worth the cost? I don't see many 2/2's on the market; however, i know that the demand for a second bathroom is high for a long term rental. 

Let me know your thoughts, I am excited to network with the community!

best,

Ryan Wydler

[Mark Fagan]

@Ryan Wydler I am also in the Richmond VA area and am looking for our next property. I just recently found a 2 bedroom 1 bath 1400 square foot house for $119k, going to look at it tomorrow. I would have passed it over if I had not heard Brandon talk about the hidden value idea. Even at asking price, plus 40k renovation costs I think it will appraise at $185-200k and rent for 1350-1450/month. Also the lot it sits on is a corner lot and I think there is room to subdivide and sell lots or build 2 more houses in the future.

As for your question about reducing from 3/2 to 2/2 I have also done this successfully in Scotts Addition, we bought a row house on Leigh street that was a 3 bedroom 1 bath and turned the small 3rd bedroom into a walk in closet and a really nice laundry room on the second floor. We now have a 2/1.5 that rents for 1650 in the hippest neighborhood in town. I would say that converting down could work depending on where the property is and what the needs for that area are. 

Would love to have coffee with some locals, if you are interested. getting ready to start a new project, could always use contractor referrals!