Being a homeowner is a beautiful thing. Having a home to call yours that saves you from paying rent while generating income at the same time is a blessing. It gives you peace of mind, but nothing ever really is that simple. You are constantly bugged by the urge to increase the value of your home – or at least maintain it.
Luckily, you can do this through various methods; making it more energy-efficient, renovating it, making it smarter, and increasing the square footage. Of these methods, the most reliable is to make it bigger. You can do this by adding an extra bedroom. If you've been a homeowner for long, this probably isn't lost, but you might not understand how the valuation increase works. Let us show you.
We bring forth an expert on renovations, a mentor and teacher of renovators who intend to build a successful business. This expert is Cathy Morrissey, the founder of The Renovation College and The Reno Chick (a moniker of hers). We would explore Cathy's analysis of how an additional bedroom adds more value to a home.
Before we start, we must point out that the first thing to do is draw up cost projections. The price that would be sunk into construction should be evaluated against the plausible value increase.
How much in value should I expect an extra room to bring?
According to Cathy Morrissey, the amount that the addition of an extra room would bring depends on the home's original value. A home with a base value within the range of $500,000 to $1,000,000 could increase the value of the house from around $50,000 to $85,000. She, however, adds that caution should be exercised and that these figures do not apply to all situations. As the type of home is a limiting factor in potential valuations, it also is a limiting factor for the viability of adding an extra bedroom in the first place.
How much should I project as construction costs?
The price for adding an extra room in relation to the potential value increase is admittedly analogous. Morrissey projects that prices can range from $50,000 to $100,000.
The essential guiding factors that should be used for cost prognosis are the size of the room you want to build, where in the home you want to build it, and the type of house you are building it in. Consider these:
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In considering size, it is important to note that prices per square meter are around $1200 to $1700.
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The materials used in the house's initial construction should be used to construct the room. Following this, people building in a brick home would spend more than people building in a home made of wood.
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The location of the new construction in the house has a direct effect on pricing too. Should the construction warrant the addition of a new floor to your home, you should know that the range of price per square foot would increase from the initial range. They should cost around $2000 to $3000.
Other costs to be considered include licensing and permit fees.
Is it wise to add another bedroom?
Cathy Morrissey answers this by saying it depends on numerous factors. The addition of a room to a home could end up not stimulating a significant increase in value. This is why the matter should be analyzed deeply before committing to it. She breaks it down like this:
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A 3-bedroom house that is holistically spacious would do well on the market if an extra room is added to it. This is because such a renovation completely transforms it into a home of a different functionality than its initial one. Thus, it is a given that the addition of a new room would increase the house's total value.
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To a 3-bedroom house characterized by small rooms and restrooms and kitchens, the addition of a new room would be an unprofitable venture. The end does not justify the means in this case. The extra room skews the home's overall balance (if you could call it that). Considering the sunken costs, this is not an advisable thing to do.
Morrissey affixes that homeowners should employ prudence and research in their decision-making process. Whether the homeowners in question are novices in the real estate world or seasoned veterans, the questions remain the same. The major priority in this home renovation effort should be to recoup the construction costs eventually. Gaining a profit is important too, but the matter of the renovation shouldn't even be considered if there are no chances of recuperation.
What to know when going forward with the addition
It is important to build with a specific market in mind. Are you building for single occupants? Couples? Families with kids? When making an additional room, these are things to consider, and it ties to what was said earlier about transformed functionality.
To paraphrase Morrissey one last time, it should be noted that the real estate business pulls a very diverse market. Laying down a standard for the specific market you want to cater to would help the direction in which your project goes.
If my house is not viable for an additional room, what other choices do I have?
Ladies and gentlemen, we present the studio/granny flat to you.
An additional room is not the only way through which you can increase the value of your home. Many people have convinced themselves otherwise and go on to build extra rooms where they weren't practical – to their detriment, of course. There are other ways through which value increase could be adopted.
In the case above of a smaller house, one can consider the size of the compound. Should this be viable enough, a granny flat could be built. This is a much better option than wasting over fifty thousand grand on renovation.
Granny flats are small flats built on the same compound as a separate structure from the house. A home with a granny flat would definitely be of a higher valuation than a generic home.