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Should
I invest? I found your site on Google while searching for ”room additions”
I have started reading your book and I am really getting a lot of
information from it.
May I ask your opinion?
I am purchasing a 1942 Cape Cod currently with 2 bedrooms
and one full bathroom which I plan to do some cosmetic work
before renting it. I hope to keep this house for 10-15 years as a
long term investment. The attic is unfinished and has a window
on each end. The neighborhood is full of these nice little homes
all well maintainded and very pleasant to look at. Some of them
have finished attics with 2 dormer windows facing the front yard
making them 3 bedroom houses thus adding 300 square feet of
living space to the exisiting 1050 square feet(like mine). I am
considering finishing the attic into a bedroom or possibly 2 and
building a bathroom directly over the downstairs bath.
A nicely maintained 2 bedroom/1 BR house rents for about
$850/month and has a current fair market value of about 120-
125K. A similar house with 3bedrooms/2BR s will rent for
$975/month and sell for about $135K.
I know you are not able to estimate costs and I will get local
estimates but could I have your thoughts about doing this given
the information I gave you. I am handy but understand this
project is beyond my experience.
Thank you.
J.B.
J. B.,
Thanks for writing. I did exactly what you are doing 30 years
ago. I bought some beat up houses & refurbished them, rented
them, then sold them years later for great profits.
Here are my thoughts. Yes, definitely improve the house.
Adding a bathroom & bedrooms will greatly increase the value
of the house. As long as you can initially get enough rent to
cover or nearly cover the payments then you are off to a great
start. The payments will stay the same but you can increase
rents yearly.
If you have a typical Cape Cod then the bathroom is in the rear
of the house. If you are going to build a dormer then build it in
the rear to accommodate the bath. Build the dormer the full
width of the house as opposed to just a bath dormer.
If zoning codes permit then you can eventually make a separate
apartment. In any event your house will increase more in value
through the years if you make the improvements. Remember,
most of your profits will not come not from the rent but from the
increased value of the house. Hope this helps.
Regards,
Bill Harbrecht
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