We live in a three-bedroom house with one bathroom. There's space to extend one of the bedrooms and add a second bathroom, but we're torn between doing this and transforming our large shed into a granny flat. Which would have the greater resale value?

"Both options will add value," says Chris Williams, Principal of Harris Partners Real Estate in Balmain, NSW. "However, I'd recommend that you renovate the shed. Properties with self-contained granny flats don't come up for sale too often, so buyers are usually prepared to pay a premium for them." It can be a bit trickier to get a granny flat through the council approval process, depending on where you live, but the extra effort will be worth it in the long run.Harris Partners Real Estate; (02) 9818 2133.