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While a combination of factors ultimately determine the value of a property, adding a bedroom to a house valued between $500,000 and $1 million generally adds $50,000 to $80,000.

Although it can cost between $50,000 and $100,000 to add one.

Generally speaking, that $50,000 to $80,000 figure is accurate, but there are caveats. Adding a bedroom is often an excellent strategy, but it depends on the property.

Many people wrongly assume simply adding a bedroom will get them that jump in value.

If you have a great three bedroom house, with a large kitchen and spacious living and dining areas, and the room to add another bedroom, it can be brilliant to turn it into a four-bedder, as that appeals to a whole different demographic. A good four bedroom house is always going to be worth more.

But if you have a tiny three bedroom house with one bathroom, adding a bedroom, and leaving everything else tiny, won’t work. You’ve just added an extra room onto a tiny house – and it could have cost you $100,000. The addition has to be relative and you have to get that money back.

Home owners should do their research.

Whether you’re a first-home buyer or an investor, you have to understand what your actual property is worth and how much it will cost to upgrade or adjust it. Will you get a return back? Will you get, at the very minimum, what you spent? These are the question you need to ask and research.

The market is too generalised. You have to understand the target market instead. Who are you selling to? How much money do they have to spend? What do they want? Make your choices based on that.

Home owners should also think creatively about ways to add value

If you do have a smaller house, rather than spending $50,000 to $100,000 adding a single bedroom, think about how much land you have.

Could you fit a granny flat? That can be just as appealing to buyers. In the long term, it’s possible that a three bedroom house with a self-contained flat out the back is just as valuable.