Looking for some advice and guidance regarding an investment decision we have regarding our house.
We currently have a 2 Bed SFH in Noe Valley that’s ~1800 sq ft, 2 bed and main bathroom upstairs and open plan living, dining and kitchen downstairs with half bath. We also have 2 car garage but cars would have to be parked one behind the other. As mentioned in other threads we also have a separate ‘cottage’ in the backyard that is ~275 sq ft that has one space and a full bath, the cottage has never been a separate dwelling and is detached from the main house by 3 foot walkway.
Here is the interesting idea, for around $200k we believe we can do a small digout of half of the garage (foundation already done in the 90s) and connect the cottage to the main house. This would give us the following extra space
- 1 downstairs living area and full bathroom (300 sq ft total)
- New mudroom, connecting the new room in the garage area with the cottage. It would also have 2 exterior doors to the backyard and side entrance to the house
- 275 sq ft - cottage bedroom integrated into the main house space with full bath
Now due to the type of remodel we would have to do, it would probably take 6-12 months to get through planning etc.
So overall it would add around 700 sq ft but would create a layout that is not ‘standard’, with the third bedroom suite downstairs accesses through a living and then mudroom.
We are seeing the finances as follows
- Remodel costs ~$200k
- Loss of separate cottage and 1 garage parking space - $90k (taken from appraisal)
- Additional 700 sq ft - Average selling price in the area is just over $1140/sq ft but assume we would get slightly less ($1000/sq ft) as the layout would be non-standard, so $700k return
Wondering what people think of this idea, it seems to be a no brainer to me. Put in $200k and return $610k, this means that even if the figures are off there is still a profit to be made.
Welcome any views on this from someone who has done major remodels in SF.