Renovating for ROI: Layout

Layout changes are best handled opportunistically. In most projects I’ve worked on, I’ve made at least some adjustments to the layout, and occasionally complete reconfigurations, when the timing and cost made sense. The deciding factor is almost always expense. Changing the layout itself is rarely what drives the price up, the real cost comes from redoing drywall and rough work. For that reason, the ideal time to make layout changes is when demolition is required in that area anyways, and those components need to be replaced regardless. In those situations, the added cost is usually limited to a bit of extra framing.

For example, let’s say you are considering opening up a living area to the kitchen or dining room. If the drywall is in good condition and you weren’t planning to remove it, tearing it out just to change the layout can significantly increase the cost. You’re not only demolishing perfectly good drywall, but also dealing with floor patching or matching, and potentially rerouting electrical, ductwork, or plumbing that was already contained within that wall. You may have paid a price for the house that reflected the fact that those areas were already in decent condition. Paying an extra premium to redo good work may not yield a positive net value return. On the other hand, if the space is already gutted, those same changes become far more straightforward because you have to incur those expenses anyways. On top of that, rerouting MEPs and reframing the opening with a beam is much easier when everything is already exposed. Depending on the situation, decisions like this can swing the cost anywhere from $1,000 to $10,000 or more.

Adding bedrooms: Look for opportunities to add bedrooms. Moving from one to two bedrooms, two to three, or three to four typically delivers the greatest return on value. Bedrooms can be created by subdividing existing space, finishing basement areas, or converting attic space. Be aware of bedroom requirements used by appraisers when determining whether finished space is counted, though these additional rooms tend to improve marketability regardless of whether they meet every technical requirement.

Adding bathrooms: Adding a bathroom when it’s needed can significantly improve value. In my experience, the biggest return comes from going from one bathroom to two. Adding a third bathroom typically delivers diminishing returns unless the market specifically demands it, which is more common in higher end homes. To maximize value, the most effective approach is to add the bathroom on a different level or as a primary suite ensuite.

Open concepts: Open concept layouts often add value when done thoughtfully. This typically means opening the kitchen, dining, and living areas to one another to create the feeling of a larger, more cohesive space. In some cases, simply widening a doorway from 30 inches to six feet can provide enough improvement to justify the cost. When evaluating changes from a return on value perspective, it’s best to work with what the space naturally allows rather than forcing a more expensive vision that the layout doesn’t easily support. While pursuing a specific design may make sense for a personal residence, simpler, lower cost modifications are more likely to produce positive net value. Always consult an engineer if you are unsure of what can be done.

Removing doorways: Moving or removing doorways can be a simple, cost-effective way to improve a home’s layout. In many older homes, you’ll often find unnecessary doorways, such as multiple entrances into a kitchen or even two doorways into a bathroom. These extra openings hurt the layout by turning functional areas into pass-throughs and reducing usable wall space. Closing off or relocating doorways is typically inexpensive and can significantly improve flow. For example, on a recent project, I took a narrow hallway and converted one end into a pantry closet, the other into a coat closet, used the middle section as a ductwork chase, and widened a secondary doorway to forty inches. That single alteration resolved several layout issues for a relatively modest cost.

Moving laundry: Moving the laundry out of the basement can add value in most markets. While it may not provide a strong return in a minor renovation, if you’re already doing significant work in the area and the market supports it, relocating the laundry can somewhat boost appraised value and moderately improve overall marketability, making the investment worthwhile.

Adding closets: Adding closets to rooms that would benefit from them can be a valuable functional improvement, provided the market justifies the cost. For example, building a closet might cost around $100 for framing, $500 for drywall, $100 for paint and trim, $200 for a door, and $100 for a closet system, roughly $1,000 total. Your local market needs to support that investment. In many older homes or lower value markets, it’s common for bedrooms to lack closets, and in those cases, spending thousands to add them may not make financial sense.

Finishing additional space: Finishing basement or attic spaces is an effective way to add usable square footage. Keep in mind that appraisers typically do not value below grade square footage or areas with limited headroom the same as main floor space, which affects the return on investment. Generally, the fewer linear feet of walls you need to build, the less expensive the conversion will be, so creating one large room is often much cheaper than dividing the space into multiple rooms. You need to determine what makes the most sense for your house and its market. Homes with limited existing square footage tend to see the highest net value return from finishing additional spaces.