Spend 46k on more bathrooms, or keep the shared baths and eat the churn?

Question

Eleven rooms, three full baths and a half bath on the main floor. Code minimum here is one full bath per five residents, so I am compliant with room to spare, and my plumber has quoted 46,000 to carve four three-quarter baths out of hall closets and one oversized room, plus about 9,000 for a new stack and venting. Call it 55,000. I also lose one rentable room in the layout, which is 690 a month, so 8,280 a year of gross gone before the first new bathroom earns anything.

The case for doing it: rooms with private baths in this market ask 150 to 200 more, my turnover reasons cluster around bathroom conflict, and my longest tenancies are the two rooms nearest the quieter upstairs bath. Ten rooms at 175 more is 21,000 a year against a 55,000 spend, ignoring the lost room.

The case against: the 150 to 200 comparables sit in a nicer part of town with newer buildings, so I may be reading a location premium as a bathroom premium. Four more wet rooms is four more sources of leaks, and my service costs go up permanently. A resident paying 690 for a room is choosing on price, and I might just be pricing myself out of the tenant pool the house is actually built for.

The third path is doing two of the four, testing the premium on real applicants for a year, and deciding with data. That costs more per bathroom and delays everything.

Where do you land.

wendy_park48 · Accepted Answer

Before the money question, pull two documents. First, the conditions attached to your license, which in many places specify an approved room count and sometimes a fixture schedule tied to that count. Adding four bathrooms and deleting a bedroom changes both, and in a lot of jurisdictions that triggers plan review and a re-inspection of the whole house, not only the new work. If your house is legal nonconforming on any point, reopening the file is the moment that status gets tested. Whether that happens depends on your local ordinance and how the licensing office reads it, so ask them in writing and keep the answer.

Second, your insurance schedule. Four more wet rooms above finished space usually moves the water damage side of the policy, and I have seen a deductible restructured after a plumbing scope was disclosed.

On the economics, your 21,000 assumes ten rooms hold the premium at full occupancy forever. Model it at seven rooms holding 120 instead, which is 10,080, against 55,000 plus the 8,280 room you delete. That version does not clear. Do two baths, price them 140 above the shared rooms, and see whether applicants pick them at that spread. You will learn more from twelve months of real applications than from any comparable across town.

raj_mehta14 · Answer

The comparables worry me more than the construction cost. You are pulling a 175 premium from buildings in a different submarket and applying it to yours, and if half of that number is the neighborhood then your 21,000 is really 10,000 and the payback doubles. Is there anything in your own house that isolates it, like the two rooms near the quiet bath, and do those actually rent for more or just stay occupied longer?

samantha_ruiz · Answer

Losing a room to gain bathrooms is the part I would fight hardest. That is permanent capacity gone.

devon_pierce · Answer

I have been building a list of room rental properties for a year and the ones that sit longest on market are the ones with the highest cost per bedroom of finish. Buyers of these houses are operators and they underwrite the rent roll, so 55,000 in plumbing has to come back through rent or it comes back through nothing. That argues for the two bath test before the full commitment, even at a worse unit cost.

derekj19 · Answer

Has anyone tried solving the bathroom conflict without construction? Scheduled cleaning three times a day instead of once, a second shower curtain and hook setup, storage caddies so nobody leaves anything in the shared bath. If the churn reason is really queueing and mess rather than privacy, a service change costs a few thousand a year and tells you a lot before you spend 55,000.

bmoreno23 · Answer

fathom naming the re-inspection risk is the thing I would never have thought to check, and I am glad this thread exists.

mikeoconnell7 · Answer

Cleaning is where this shows up. Four private three-quarter baths cost me less per week to service than three shared baths, because shared baths need daily attention and private ones get done at turn plus a monthly check. Your ongoing service line might actually drop, which nobody has priced here. Leaks are a separate question and I agree they go up. Worth asking your plumber what the annual maintenance draw looks like on four new wet stacks versus your current three.

aliyah_b · Answer

Nobody has said where the 55,000 comes from. If it is cash out of reserves, you are trading your cushion for a premium you have not proven yet, and the six week bad stretch other threads describe becomes a lot harder to absorb. If it is a draw on a line, that payment lands whether the premium shows up or not.

omar_haddad · Answer

Carving bathrooms out of hall closets in an old house is where scope creep lives. You open a wall for the stack, find knob and tube or a joist someone notched in 1974, and now you are pricing electrical and structural on top. I would take your 55,000 and carry 20 percent, so 66,000, and I would want the plumber to open one closet on a paid exploratory before the whole quote means anything. Doing two first is also the cheaper way to discover what is behind the plaster.

marcus_hale41 · Answer

The exit assumption is doing a lot of work in your post and it is worth stating out loud. If you hold this fifteen years, a premium that holds for a decade justifies the spend even at a slow payback. If you plan to sell to another operator in four years, you get back whatever the buyer's cap rate says the incremental NOI is worth, and you are betting they believe your premium is durable and not a leasing push. I have underwritten a few of these and I discount owner-reported premium rents on room product fairly hard, because the rent roll turns over faster than the evidence period.

Spend 46k on more bathrooms, or keep the shared baths and eat the churn?

10 replies