BRRR: large closet or 2 half baths

[James Tiu]

Hello BP,

I'm in the middle of a BRRR duplex project in San Diego. It is an identical looking duplex with approximately 720square feet each and 2 bedroom 1 bathroom. Right now, I am faced with a dilemma. Should I turn this weird hallway space that connected the 2 units into a large closet, or should I turn it into 2 half baths. Each unit would then have a half bath/powder room. The 1st unit half bath would be a little awkwardly placed inside a room. The 2nd one would have a more public access from hallway.

I believe it is worth it from a ROI standpoint. I am being quoted $7000-8500 for both half baths. According to the comps I would have an extra $100-200/month total rent from the units. My issue is I don't have much more in my construction reserves to budget this extra renovation. I would either be putting this all on credit or eating into my 6month emergency fund reserve.

My biggest question is, from a strictly ROI standpoint would you add the half baths to each unit for $7-8.5k for an extra $100-200/month. Please also share thoughts if the placement of a half bath would be awkwardly placed in a room.

Thank you BP!