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A lot of investment properties have something we call Bonus Space.
It's space that isn't quite a bedroom, maybe not really living space, but doesn't have any one specific use.
So, how do you use this space to create value for your investment property?
Well, that depends...
A bedroom is almost always going to be the highest value use of any bonus area, so let's try that first. So, it's time to look up your local health/building codes to determine the requirements for a bedroom.
The International Residential Code, which most states follow, has several requirements to be considered a bedroom. States and municipalities are free to add on top of this, and some areas don't use the IRC as their code.
Most places have a square footage requirement and also require a window and a closet. But, different states/municipalities may have different requirements so look them up.
Note About Egresses
Basements and Attics are notoriously bad places to be during a fire. There may be requirements for additional egresses for any living space that is in these two areas. Make sure you know all of the requirements before trying to make a bedroom.
Once you know the requirements, you can determine if a simple project can convert this random bonus space can be used as a bedroom.
For example, if it just needs a larger window, simply hire someone to install it. If you need a closet, get one put in.
It becomes more challenging if you need another egress added to a basement though.
Most bonus space can't be used as a bedroom, so don't feel bad about that. The next thing is to figure out exactly what you can do with the space.
The first step is to figure out exactly what you're working with and what it can look like when you're finished.
Regardless if it's in an attic, basement, porch area, or whatever, it'll need to be finished with drywall, paint, floors, lights, and heat/ac. Your bonus space probably has some of these already, but often not all.
Basements are usually cool and damp, so you may need extra heat during the winter and a dehumidifier in the summer.
Attics are really hot, so you'll need to add extra air conditioner. Also, you need to make sure your roof is ventilated properly before completely finishing an attic so take that into consideration before adding drywall to the rafters.
Every area will have it's own unique considerations before starting the project.
This is really open to interpretation, but you need to figure out it's best use for other people.
The best thing to do is to look at comparable sales in your market area. Look at what most other people are putting into their properties, then just copy them.
Here are a few common ways people use their bonus space
The most common way people use their extra space is by using it as a second living room, den, or media room. These are all different words for similar things.
Basically, one living room will be a bit more formal for having guests over. The den or media room will be for watching TV or movies mostly.
If you are outfitting a room for this use, it might be beneficial to install speaker wires around the room (this is very cheap), and make sure there is cable and internet hookups.
If your investment property already has an area dedicated as a den, you might want to consider outfitting it as a game room.
A lot of people just need extra space for storage. Having a clean and dry area to toss junk is the lowest value use, but still important. Having this finished space will most likely make it more valuable anyhow.
The next step is to advertise your bonus space. You're either listing this property for sale, or listing it for rent (it's an investment property, right?).
It's important to bring attention to the bonus space, especially if it's not listed in the square footage or other information about the property. This is really common for basements and attics.
In this situation, bring attention to it and make people image what they could use it for, but don't specifically say it can be used for things that it shouldn't be used as (such as a bedroom). People will often use the space however they want, including as a bedroom, but you should not encourage this if it's not a legal bedroom.
So, you'd could potentially say something like:
There is an extra 400 square feet of finished bonus space in the attic that could be a game room for you and your friends, media room for late night movies, or whatever else you can imagine! It is heated, cooled, and has everything you need to enjoy it day and night all year long.
But you'd never want to say something like
There is an extra 300 square feet of finish bonus space in the basement that could be used as a media room, den, game room, or even an extra bedroom when friends come visit.
...assuming the bedroom is not legally a bedroom in your jurisdiction.
It's hard to say what bonus space is worth, but it's worth something.
The only way to figure it out is to try to sell it or rent it out, and see what the market will give you.
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Eric is an investor that achieved financial independence at the age of 30. He started in 2009 with the purchase of his first triplex and now owns over 470 units. He spends his time with his family, growing his businesses, diversifying his income, and teaching others how to achieve financial independence through real estate. Eric has been seen on Forbes, Trulia, WiseBread, TheStreet, and other financial publications.
I started out as a full-time student, over $60,000 in debt, and didn't even have a full-time job (two part-time jobs).
Learn the system I used to create a 6-figure passive income.
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