I am looking at a deal in North Austin at a 100,000 house (after repairs) where a one car CARPORT was converted to a bedroom. Assuming the conversion is decent, how do I compare this house to an identical house that has no conversion. Also, how would I compare in this case if it were a one car GARAGE conversion? Thanks!
Mike,
Here’s my best guess and I’m no expert.
Assuming all things equal, the house would be compared against houses with similar numbers of bedrooms and bathrooms. In other words, if it was a 2/1 and is now a 3/1, then in theory you would compare against 3/1’s. You may want to back off for some items like quality, bathroom access, funky floorplan. I don’t think there’s an easy answer here, but that’s where I’d start.
If it had been a garage, I ignore the conversion for houses up to about 125k ARV. In other words, if it were a 3/2/2 approximately 1,500 sf etc. prior to conversion, then in my mind, it still is for comparison purposes. My experience has been that folks in this price range are frequently happy to have the extra size for the price.
For medium priced houses, say 125k to 175k, I would actually subtract some amount, typically 5k to 10k, depending on best guess and realize I have to find the right buyer. It seems fewer folks are space per foot shoppers in this range.
For houses above that, I’ll deduct what I think they spent. So, if a seller is rambling on and on about their 20k garage conversion, they’ve just lowered their ARV by the same amount.
Now, if the seller had enough foresight not to do a full conversion and left the garage door, then this doesn’t have to be a negative on the mediums and higher priced homes because it can be put back quickly and cheaply.
My view…
Thanks, Tim.