Expert: Jessica Bryan - 1/4/2012

Question
QUESTION: I just purchased a 900 sq. ft. 2 bedroom, 1 bath home back in April near Los Angeles. I am considering either adding an additional full bathroom off the master bedroom and/or enclosing the patio to make a sun room. My questions are: 1. What is the better addition to make in terms of resale value, resale potential, return on investment? 2. Do you think the investment is worth it in terms of resale value, resale potential, and return on investment? I'm curious if a 2 BR, 2 BATH is much more marketable than a 2BR, 1BATH? I am also considering adding an entire master suite, complete with full bedroom and bath, making the home a 3+2 but not sure if the extra expense would be justified in terms of return on investment. If you had the money for any of these additions, which one(s) would you do? Or should I just leave the property as-is? I appreciate your feedback.

ANSWER: Dear Michael;
When you say that the home is near Los Angeles it doesn't tell me if it is in a highly desirable area which would make a difference on the investment and resale value.  There are certain areas that are growing and attract families while others are attracting singles. This, of course makes a difference on whether larger homes with more bedrooms are more desirable than housing for a single or a couple.  If it is an area that is seeing lots of remodels and additions this will also help you to decide what to do. I suggest speaking with a local Realtor to get input.  

As a rule adding a larger master bedroom and bath would be the most desirable choice making the home a three bedroom two bath home.  Most people who need less than a three bedroom two bath home end up renting an apartment rather than buying a home.

If I were deciding what to do I would most likely add a master bedroom and bath.  The value is the best and the home is far more marketable to a higher percentage of buyers.  However, it is probably the highest expenditure for you. With interest rates being so low, it is a good time to do this though.  

Best wishes,
Jessica Bryan

---------- FOLLOW-UP ----------

QUESTION: Thank-you for the insight Jessica. It was certainly helpful. I'd like to include some follow-up information that may help you see my options more clearly. First, I would be utilizing an FHA 203k refi to pay for the home addition(s). As to the costs of each addition: master suite with bath=$37,500, just full master bath=$12,000, and enclosed patio=$8,600. We live in the San Fernando Valley, near Woodland Hills. Our neighborhood consists primarily of families who have lived there for decades. There are some couples who live in the neighborhood as well. My feeling is to just do the master bath as this is what my wife and I really want. The enclosed patio is something I have always wanted, and I do feel it would add an extra "room" to our smaller home. However, I'm not sure if the expense would be justified. Let me know if any of this changes your opinion at all and thanks again.

Answer
Hi Michael;
Having lived in West Hills for many years before moving to Chapel Hill North Carolina, I know that area well!  Woodland Hills and the surrounding areas of Reseda, Canoga Park, etc are still more attractive to those looking for 3 bedrooms and two baths.  Because of the fact that a second bath is ALWAYS valuable I think that it is the best decision you can make. However, I would suggest additions in this order...bath/extra bedroom/enclosed patio.  I feel pretty sure about the 3 bd 2 ba home in your area.  It is a good investment if you can afford it.

Good luck and best wishes,
Jessica Bryan