Looking to raise the equity, rent and rentability of your property? An extra room might help, but it must be done right. Before starting any kind of construction on your property, you must do your research. Firstly, what is the market saying and where is the demand?
If the area is popular with young professionals or couples, a third bedroom may price your property out of the market or it may not provide a decent return on investment. Meanwhile a fourth bedroom in student quarters, a great school zone or lower decile area could easily mean an extra $100 per week.
So you’ve decided that adding a room to your house is the way to go, how should you go about it?
Add an extension
Extending onto your house is a popular, but often more expensive option. You must take into account local council regulations, planning consents and how the extension will affect the flow of the house.
Adding an extra bedroom and ensuite could cost between $60,000 - $80,000, taking into account a project managed site involving up to 10 different trades. However, in the right area moving from a three bedroom one-bathroom home, to a four bedroom one-bathroom and ensuite house can add $100,000 to your property’s value. You’ll need to be very careful of council restrictions, height to boundary limits and drainage.
Move a wall
Another, more affordable, option is to move an existing wall to make better use of the space you already have. Sometimes all it takes is a fresh pair of eyes looking over the layout. Doing your homework and involving a certified builder and architect is important, particularly to ensure load bearing walls are correctly accounted for. All up, moving a wall could cost around $20,000. That’s approximately $3,000 in architect or draftspersons fees, $3,000 - $4,000 in council planning costs and anywhere from $5,000 - $10,000 in tradie’s fees for building and decorating.
Read more: 3 quick home renovations that add value to a property
Three smaller bedrooms could have greater value than two large ones. Or a laundry could become a study or small single bedroom, if you don’t think tenants would mind a washing machine closer to the kitchen. Your $20,000 investment could have a $40,000 to $50,000 return in valuation increase. The extra $100 per week in rent that third bedroom could bring would pay off your investment in four years.
Split a room
Splitting a room or carving up a larger living area is another option. You really must weigh up the cost of the extra bedroom, versus open living spaces. Will the ‘boxed off’ area really add new value as a bedroom, or will it be more like a glorified cupboard with no practical use? How will it affect the flow of the house? Will it have any natural light?
Each project is different and costs will depend on what’s involved and whether you need council consents, but splitting a room should only cost around $10,000. Done properly, you still gain the extra bedroom you want, and the payoff period on your investment is significantly reduced.
When it comes to adding a room to your house to boost property value and rental return, your best first step is talking to a property expert who can guide your decision, help you avoid common pitfalls, and reach the most desirable outcome.
Download our A-Z guide is a handy guide to help you navigate the property investment world, and make buying, leasing, and selling homes that much easier:
