Garage vs dining room – where should I add an extra bedroom?

If you want to increase the rental potential on an investment property … you’ve got to add an extra bedroom.

That’s why this tactic is step #1 of Cashflow Hacking– a 6-step approach to turbocharge any BRRRR project.

Over the last 15 years I’ve completed over 100 renovations (some personal, some with the investors I work with).

And through that experience I’ve found that most investors think turning a garage into an extra bedroom is the best option when renovating a property.

And while that is an option … it’s not always the best way to do it.

Sometimes, a quicker and less expensive solution is to create a room out of unused dining room space.

In this article, you’ll learn the pros and cons of both a garage and dining room conversion. You’ll also learn the costs so you can decide which option to go for.

Quick facts:

• Garage conversions tend to result in bigger bedrooms, and you don’t lose any living space through the renovation.

• Garage conversions can cost in the region of $15k, all the way to $80,000 – depending on the property and whether you DIY or hire builders

• Dining room conversions are cheaper and faster to execute. These can sometimes be done for as little as $7,000

• Garage conversions require consent and take longer

• Both options will add value to the property, but which one you go for depends on the floor plan for the property.

What are the pros and cons of a garage conversion?

Here are the pros and cons of converting a garage into a bedroom (or multiple bedrooms).

Pro – often can add more rooms. Doesn’t compromise living space

Firstly, a garage conversion will (usually) produce a larger bedroom (or bedrooms). It also won’t decrease the amount of living space.

You lose that common area if you convert a dining room into a bedroom.

Now, aside from the obvious, if you convert a garage and create a larger bedroom:

• It can usually accommodate a built-in wardrobe and will more easily cater for a couple

• There will be more choices for how the room is used, e.g. it could be a rumpus room.

• A bigger room can better appeal to couples, so it appeals to a bigger pool of potential tenants

By comparison, a dining room is more likely to be smaller. And it will shave away some space from the original living area.

That said, from my experience, I don’t find that a garage conversion gets more rent than a dining room conversion.

Con: a garage conversion takes much longer

A garage conversion needs building consent because this type of renovation is classed as a ‘change of use’ by the council.

Why? A garage wasn’t designed to be slept in or accommodate people.

There’s often no insulation, and the garage is built to a lower standard than the rest of the house.

This differs from a dining room, which was always designed as a living space.

There are many additional aspects to consider, and you must bring that new space up to the building code.

In my experience, converting a garage into a bedroom can range from $15k (for a DIY approach) up to $60,000. In some cases the cost can even reach $80,000.

You’ll reach the higher end of that price range if you completely outsource the entire renovation.

On a recent episode of the Property Academy Podcast, I shared a case study of investors who added 2 double bedrooms into a garage.

This was an intensive renovation and cost around $50,000 to execute.

Not every garage conversion will cost this much, but there are additional factors you need to consider. For example:

• The trusses in the ceiling are often further apart in a garage, and this will need to be filled

• Downstairs garages are more susceptible to moisture, so the existing barrier (a polythene groundsheet) must be adequate. If you don’t have one already, you’ll have to retrofit one. This adds cost to the renovation project

• The garage floor level is often lower than the rest of the house. You need to raise it, so it’s level with the rest of the house

• Are the windows efficient to allow enough air and light into the space to be considered a liveable bedroom?

These things combined – the complexities of the renovation and waiting for council paperwork – can push your timeline out by several months.

So, this might not be the right choice for people on a tight deadline.

What are the pros and cons of a dining room conversion?

Here are the pros and cons of converting a dining room into a bedroom.

Pro: can be completed in 1-2 weeks and is substantially cheaper

Conversely, a dining room conversion isn’t as complex.

Typically, investors will build a cosmetic wall between the dining room and the lounge. This simple conversion can be done in about 1-2 weeks.

Here’s an example of how a bedroom can be created this quickly. A recent investor I coached made an extra bedroom out of a dining nook.

While the living area was open plan, the dining area was partially sectioned off for privacy and to create an additional space.

It was located right next to the hallway and had a nice window that would be perfect for a bedroom.

So the investor built a simple cosmetic wall, and the dining room became a bedroom.

Dining room conversions are also substantially cheaper. We already mentioned that a garage conversion can range from $15k - $80k.

But a dining room conversion is typically around $7000, or close to this mark.

An investor I coached did a dining room conversion for just over $6k. The process took 2 weeks, and the rent jumped by $220 a week.

This means the additional rent will pay back the cost of the dining room conversion in around half a year.

Con: the bedroom can be smaller

A dining room conversion must be a minimum of 7.5 square metres to get the maximum rent increase.

Because the bedroom will be around 7.5 square metres, it usually ends up being a single bedroom.

For context, a double bedroom is usually 10 square metres.

This isn’t necessarily a huge issue, but it is something to consider within the broader context of the property.

You need at least some of the other bedrooms to be a decent size. They can’t all be small.

For instance, let’s say a property begins as a 3-bedroom home. If you then convert a dining room into a fourth bedroom (even if it’s a single one), it’s likely to increase the rental potential.

That’s because:

1. You’ll probably rent the property to a family, where a child can use the fourth single bedroom
2. At least some of the other bedrooms will likely be a decent size

However, let’s say you convert a 2-bed into a 3-bed, and the extra bedroom is a single room.

In this case, the original bedrooms have to hold their own.

If the property now has 3 small bedrooms, the property won’t be attractive to a tenant.

It would be more acceptable to have 2 large bedrooms and 1 smaller single room.

Garage vs dining room – what is the right fit for my property?

Generally, I recommend investors aim to convert a dining room into a bedroom – or some other space within the current living area.

Dining room conversions are quicker, cheaper, and you don’t have to deal with the council. On top of this, they still get a good return from higher rent and the property increasing in value.

However, which way you go depends on the property's layout, size and configuration.

Pro tip – whichever way you go, the conversion must “feel” natural.

They must flow with the original floor plan and layout of the house.

For example, you can’t have a bedroom that you have to walk through another bedroom to get to (yes, I’ve seen someone try to do this).

There needs to be access from the new bedroom to either a living space or a hallway.

If you’re unsure, have a chat with your property manager. They might be able to pick holes in your grand plan. You may also save yourself problems in finding a tenant later on down the line.