Some homes are undervalued because they’re missing an essential feature — a livable living room, a third bedroom, a deck, or a laundry room on the main floor. Other homes may have major eyesores, such as an outdated kitchen or bathroom. In either case, moderate to major renovations may improve the marketability of the house and its profit potential in two ways:

 Increase the home’s actual value: Wear-and-tear depreciate a home over time. Updates restore value, and added living space can boost the house into a higher price bracket.

 Expand the pool of interested house hunters: A two-bedroom house, for example, appeals only to people who are looking for a one- to two-bedroom house. Adding a third bedroom attracts anyone looking for a one- to three-bedroom house or a house with office space.

Adding to the real value of a home is a useful way to maximize your profit — but don’t take on more than you can handle or build a mansion among bungalows. If you’re a weekend warrior or you have contractors on your team (see ssss1 for details), consider this strategy. If not, you may want to hold off until you get to know some local contractors.