So a lot of my class C houses are small little 650-700 sq ft 2 bed, 1 bath, kitchen, living room set ups. Most are built post World War II where you can tell one builder came in and built the whole street, every house is pretty much the same.

Over the years some people have added a 3rd bedroom onto the back of their houses. I’ve been kicking around the idea of doing this as houses become empty. Not only would it raise my rent another $200/month but also increase the value a little.

Obviously have to run the numbers and see how long before the payback would be to see if it is worth it.

Around the year 2000, I purchased some run down 2+1 homes with detached garages. These homes cost around half the price of a 4+2 with an attached garage.

I simply built a small hallway from the house to the garage. Ran plumbing and electrical to the garage, installed insulation between the studs and rafters and drywall the garage. I left a garage door. Instead of swing type I installed a double wall insulated roll up section door. So the Garage could still hold a car or two, but I obtained with a heater and windows a certificate of occupancy for the converted garage.

But I also installed in the garage a "Walk in Closet". And along the enclosed walkway to the garage installed a Laundry room and Second Bathroom. Toilet accessed thru on hallway door, with a small sink. And the Shower and a second sink access thru a second bathroom door.

So now this house was a 3+2, with a large walk in master closet with a laundry room.

Instead of a garage, I set up a two car carport in the back yard with a Shed for storage.

How you raise value doesn't matter as much as that you are doing just that.

I don't think it's worth doing that in areas where the cost of adding the room is high compared to the increase in value.

Maybe ok in places like Calif where a 50-80K price might increase the home value by 150K or more.

I think it depends on your market and your costs.

What will it cost? $30,000?

What increased rent can you get? $300?

How long will the payback be? 100 months / 8 years?

How much additional value do you add to the property? 50,0000?

Otis,

I would add a 2nd bathroom before adding a 3rd bedroom. A 2nd bathroom, which I have added in two of my houses, is where the money is.

I just had this discussion with my son who does live-in flips. Some investments of time and money yield a positive return at resale. Some unnecessary but expensive improvements like room additions and swimming pools can lose money for the seller.

Biggest thing would be to pay attention to your new roofline. You don't want to run into problems with the join.

Expansions are super-common here. They'd build their basic house in the 1920's, then maybe expand it a little in the 40's or the 50's. It's always cool to identify the original footprint of the house, and then see how it's been expanded over the decades. There are a few major strategies that I've seen people use in the houses I've picked up.

* One type of house generally has jack-and-jill bathrooms between the two original bedrooms. That means that if you create a third bedroom, you need to access it through someone else's bedroom. Not really a problem, but something to be aware of.

* Another type of house turns the rear extension into a large bathroom-and/or-utility room rather than an extra bedroom. So in some cases, that means that you have an exterior door on your bathroom.

* One type of house, rather than expanding towards the back, will expand sideways. (ie, enclosing a carport into living space.) Double-check your lot for setback requirements. Sometimes this new room ends up being a living room with a bedroom behind. Other times, this turns into a man-cave kind of room. Sometimes there's not enough attic clearance to feed central heat and air into this new room, and it needs a window unit or a through-the-wall unit or a furdown to feed air into it.

* I have one house where the long, narrow back addition turned into the kitchen, the bathroom, and the utility room.

* Some houses have additions that tend to pull away from the original house over time, so if you live in a place that's very shifty-soil, take that into account. Other houses are such that the addition isn't flush with the rest of the house-- the ceilings are lower, or there's a stepdown. This can be a little significant when it comes to standard door sizes, so keep that in mind--- door sizes that can be easy to get nowadays might not always be the standard, so give yourself plenty of wiggle room for future renovations.

I'd turn it into a 2-bedroom 2-bathroom and upgrade the kitchen somehow rather than add a 3rd bedroom.

Gosh you peeps are making me paranoid. Almost everything I have is 3 bed 2 bath 60s ranches. I had some small houses and sold them because of the lower rent and lower class tenants. I find less drama and more money with the 3 bed 2 bath. It attracts families that tend to stay. I often add a 12 x 16 out building and they fill it up with stuff and stay long term. I had very little turn over last year and nothing this year.