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Adding an Addition to Your Investment Property? 5 Factors You Should Know

September 6th, 2023 |

Home addition planning can be exciting and stressful for an investment property owner. From hiring a contractor to figuring costs, many factors must be considered. Keep the following tips in mind when making house addition plans.

#1 Decide Whether an Addition Is the Best Option

A home addition can be costly, so make sure it’s the best option for your property. Ask yourself if an addition is really in your best interest. Look at the space and layout that you already have. Can you finish the basement to provide an extra room? Maybe you can knock down an interior wall to better use adjacent spaces. 

#2 Consider What You Need From an Addition  

As an investment property owner, you want to create a livable, functional space for your tenants. House addition plans should meet the needs of the occupants. For example, a new kitchen should be constructed to provide a comfortable and efficient workspace. A master bedroom should serve as a quiet haven. When evaluating your property, consider what is lacking or needs improvement. Then, you can plan an addition that will improve the existing space.  

#3 Factor In Hidden Costs

Some home addition costs are easy to anticipate, such as building materials, labor, and permit fees. However, there are many less obvious costs to keep in mind during addition planning: 

Insurance and Tax Increases 

Two expenses will likely increase after an addition: home insurance and property taxes. On a positive note, higher insurance premiums mean that you’ll be covered if the new addition is damaged. Higher property taxes are a result of increased home value after an addition.  

Loan Interest and Fees

If you take out a loan to finance the addition, you will pay more than the loan’s original amount. Interest, origination, and processing fees add up quickly, so remember to include these costs in your budget.  


During a home addition project, the surrounding lawn, shrubs and planting beds can take a beating from machinery. You may have to remove or replace plants and grass on the property. 


When hiring a room addition contractor, understand the fees and responsibilities for waste removal and debris cleanup.  

#4 Weigh Cost vs. Resale Value

An addition may increase the resale value of your property. For example, a midrange bathroom addition can yield a 30 percent return on investment (ROI). However, the additional space can result in higher property taxes and other increased costs, such as heating and cooling. Depending on the local market, you may not recover the additional cost when selling your investment property. 

#5 Hire a Reputable Contractor  

A general contracting professional is indispensable when it comes to addition planning. Get bids from multiple room addition contractors and ask for project timelines, payment schedules, and warranty coverage details. Confirm that a contractor is licensed and insured, and check references from clients who have completed similar projects.   

At RH Blanchard, we make Boston-area house addition plans come to life. Get in touch with our general contracting team today for a free quote.