How much value can an extra bath & bedroom add to my home?

Written by debbie donner
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How much value can an extra bath & bedroom add to my home?
Mid-range home improvement projects typically have a higher ROI than upscale improvements. (young woman with rolls of wallpaper image by Pavel Losevsky from Fotolia.com)

Picking the right time for a home improvement project can be just as important as picking the right project in order to achieve the maximum added value for your home. Some additions to a home are worth the time and expense, as you will likely enjoy a higher ROI (return on investment) when you sell your house. In most cases, an extra bath and bedroom will add substantial value to your home, with an estimated ROI of 66 to 90 per cent.

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Timing

In a strong housing market, the addition of an extra bath and bedroom can add substantially to the resale value of your home. In a sluggish market, home improvements may not pay for themselves, depending on how long you plan to stay in your home. For 2009 through 2010, the national average cost in the United States for a bathroom addition was £25,379 to £49,277, and such a project resulted in an increase in resale value of £15,101 to £28,527. The average cost for a bedroom addition (attic bedroom or master suite addition) was £32,074 to £146,896, with increased resale value of £26,644 to £81,765.

Neighbourhood

Consider the other houses in your neighbourhood before deciding how much value an extra bath and bedroom could add to your home. Overbuilding for the neighbourhood could be an expensive venture that is not likely to pay off in the end. On the other hand, if your home has two bedrooms and one bath, and many houses in the area are three-bedroom, two-bath homes, adding an extra bath and bedroom could significantly increase your home's value. If you plan to sell your home in the near future, you may want to consider smaller, less expensive home improvements because there is no guarantee that you'll achieve a worthwhile return on your investment.

Costs

Spending £26,000 to add an extra bath or convert attic space into a bedroom does not mean you will get £26,000 back when you sell the house. If your house is already comparable to other properties in your neighbourhood, a modest makeover of the entire home could save you money and pay off better than a bigger-budget project on one or two rooms. Especially if you plan to move in the next year or two, save the money to put into your new home, and complete a few less-expensive enhancements instead. Home staging experts recommend spending a more modest amount -- £3,250 to £6,500 -- for fresh paint, new carpet, updated fixtures, doors and windows, curb appeal and other general improvements that attract buyers.

Projects

When you consider to what extent you want to go with your home improvement project, it is best to follow the 15 per cent rule. Know your home's value, and do not spend more than 15 per cent of that on any one project. Some beneficial projects with the best ROI include: interior/exterior paint (75 to 90 per cent ROI); adding an extra bath and bedroom (66 to 90 per cent ROI); kitchen remodelling (72 to 80 per cent ROI); and adding a deck (71 to 81 per cent ROI).

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