Q&A: Is it worth adding an extra bathroom?

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10/08/2011


Q
My wife and I recently bought a three-bedroom house in Hobart as an investment property. It has a smallish bathroom so we were thinking about converting the internal laundry into a second bathroom. Is this a wise investment move for adding value to the house? Would a second bathroom earn much more rent? Do you think we should bother building an external laundry or just add a washing machine to the main bathroom/kitchen?

A
It would be impossible to let you know the exact figures on your property, but my simple answer would be yes. I’ve just completed a renovation where I changed the laundry into a full bathroom.  This was incredibly successful and was part of creating a very positive geared property. The best part about adding a bathroom is that you’ll not only receive a much better rental return, but the property value will increase substantially. 

The downside is that changing a laundry into a bathroom is one of the most difficult and costly property alterations. All of the plumbing must be changed, unless you already had a second toilet in the laundry that can be utilised to save on costs.

Without guarantees, my simple calculations indicate a second bathroom could increase the rent by about 10–20% but you must watch the amount of money you spend on your new bathroom.

With my recent renovation it actually increased the rental by $100 per week and the cost of the bathroom was a little over $5,000, so my returns on the renovation/investment are 100%! The capital growth received from this conversion was about four times the renovation cost.

My immediate response regarding an external laundry would be to not bother building another room because this would cause further delays and add more cost. I placed the laundry into a section of the hallway that led nowhere but backed onto the old laundry, which is now the new bathroom.
I have, however, seen laundries successfully built into cupboards, inside or outside properties. In my experience, tenants want somewhere clean, tidy and know they have somewhere for their washing machine.

Answer supplied by Prue Muirhead, Your Investment Property’s Investor of the Year 2009

Do you have a property investment question you need answered fast? Get in touch with us at editor@yipmag.com.au or go to our forum at www.yourinvestmentpropertymag.com.au/forum.

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