In certain cities, real estate comes at a premium. Take New York City, for example, where you'll pay an average of $1,376 per square foot for the privilege of owning a place of your own.
If you're in the market for a two-bedroom apartment in a major city, you may find that it's out of your price range, whereas a one-bedroom may be more affordable. There's just one problem: You may have a harder time selling a one-bedroom when the time comes for you to move on.
While it's not uncommon for families with children who live in cities to cram into a two-bedroom apartment, with a one-bedroom, that's much more difficult. As such, you may not get top dollar for a one-bedroom like you would for a two-bedroom.
Even if you're buying an apartment with the hopes of staying put for a long time, you might eventually need a two-bedroom yourself, especially if you decide to expand your family or start working from home, which may require a dedicated office. And if you're buying an apartment you might one day choose to not live in yourself but rent out, a two-bedroom gives you more options than a one-bedroom.
Therefore, if you can't afford a two-bedroom apartment, you might consider buying a one-bedroom and converting it to a two-bedroom after the fact. But is that really a good idea?
The pros and cons of adding a bedroom
Converting a one-bedroom to a two-bedroom gives you more private space in a more affordable apartment. It also gives you the option to control how large or small that second room is. Imagine you need just a small home office, or a tiny nursery for a baby. When you put up your own wall, you get to dictate how many square feet that additional room occupies.
On the other hand, converting a one-bedroom to a two-bedroom means taking away from another part of your home. For example, adding that bedroom might cause you to lose out on living room space, or it might make your main bedroom unbearably tiny.
Furthermore, you may not be able to just construct a wall as you see fit and call it a day. Depending on your building's rules and local zoning laws, the conversion you have in mind may not be possible. Even if you are allowed to add another bedroom, it may need to be a certain size, and it will generally need to have at least one window. As such, if you're going to buy a one-bedroom apartment with the specific goal of converting it to a two-bedroom, make sure its layout allows for that.
How much will it cost to convert a one-bedroom to a two-bedroom?
The amount you'll spend to convert a one-bedroom to a two-bedroom will depend on how complicated the work is, whether you can do the job solo, and whether you'll need a permit. For a simple project that mostly involves putting up a wall and calling it a day, you might spend around $5,000, plus a little more to build a closet. But if you need to get an architect involved and pay hefty permit and building fees, you could be looking at more like $10,000 to $25,000.
What about return on investment?
If you can convert your apartment at a relatively low cost, you might recoup your investment relatively quickly. The average rent for a one-bedroom, on a national level, was $1,586.84 in 2019. For a two-bedroom, it was $1,808.73, which works out to about $222 extra a month. If you spend $5,000 to convert your apartment, you'll recoup your outlay in 23 months based on these average prices. And in some markets, you might recoup your costs even more quickly.
Should you buy a one-bedroom and convert it?
If a two-bedroom apartment is too much of a financial reach in the city you want to live in, then it could pay to buy a one-bedroom and add an extra room after the fact. Just make sure doing so is feasible before committing to that purchase. Otherwise, you could get stuck with a home that doesn't suit your needs, and it could also be an issue when you attempt to rent out that home or sell it.
And if your goal in converting a one-bedroom is to score a decent return on investment, make sure you can pull off that project in a relatively affordable fashion before moving forward. Otherwise, you could end up waiting a long time to get your money back.