We've converted two attic spaces (same house, opposite ends) to living space, with low ceilings. From my experience, the first thing to do, after determining whether you can safely/legally finish the attic, is to run the electrical wires. To avoid running duct from a furnace/AC, I'd run 220v for a couple of baseboard heaters, and use the portable AC units which sit on the floor and vent through a window. I can see some natural light, so it looks as if you have dormers, which might be fine for egress and the portable AC units. We used foam baffles between the roof and insulation, then sheetrock as usual. If you are not confident about finishing sheetrock, and don't want to pay to have it done, you can tape it, then cover with inexpensive sheet beadboard. I like your floors as they are, but you'd want to seal them, if not paint. Those are much nicer floors than I've ever seen in an unfinished attic. I'm impressed that there are floor boards at all--I've see a lot of attics with a few pieces of plywood laid across the joists to store boxes. Since the knee walls wouldn't be structural, I think you could frame them yourself, with some research, and basic tools. You might as well frame them in, since that space is too low to use as living space, and if you feel confident enough, you can turn the space into recessed storage--shelves or converted dresser/drawers--very convenient if the space will be used as an office or craft room. If you choose the portable AC option, you could even tailor a storage space to the unit(s), for the off-season. Following are pics of some of the kneewall storage in our half-story attic addition. I did most of the work myself, with limited construction experience. (Left the electrical work to the pro.) The white walls, and closet doors, are the sheet beadboard I mentioned above. I also had to work around closet space in adjacent bedrooms, and the old roof supports, which is why the recessed shelves in the first pic are so shallow. If you can find cabinets, drawers, and chests on craigslist, Goodwill, and the Restore, you can keep the cost down--but only if you have more time, than money, to invest in the project. It would be very difficult to estimate the cost. Our neighbor is a master electrician, and we traded him a strip of land that he'd been asking about, to wire the whole addition. We already had all the tools needed. A chop saw/miter saw, set up in the space as I was working, was invaluable. Circular saw for angled cuts on 2x4 framing. Reciprocating saw for cutting existing framing, and a jig saw for small cuts is also useful. Framing and finishing nail guns are convenient, but I don't like using them, so I did all the nailing with a hammer. I love hearing a nail 'sing' as it's being driven into the framing. :) If you have friends or relatives with construction experience, who will do favors or trade skills, then you can keep the cost down. Kneewall storage ideas/google Portable AC units on Amazon

As an retired appraiser, I am loath to ever advise the loss of a functioning bathroom. It will usually result in a loss of valuation. If the subject home had five baths, it would be a very different answer. The extra baths would be redundant. It is typical that more buyers want three bedrooms and two baths than two bedrooms and 1.5 baths and are willing to pay for the extra utility more bedrooms and baths offer. When I read your description of the issue my first thought was the loss of the downstairs bathroom is probably not a big deal. Then I looked at your floorplan. Now, I'm not so certain. Two things come to mind, will this house be a candidate for tear down? It is at the beach. Are there a lot of teardowns nearby? If there are teardowns and new construction, it really doesn't matter what you do. The buyer will only want the lot. If it is likely that a new buyer will not tear the house down, I would advise against the loss of the 3/4 bathroom. With very little effort and minimal cost, your downstairs floor plan can be adapted to incorporate a downstairs bedroom. The addition of the downstairs bedroom with bath would place the home in an entirely different category of buyer. Downstairs bedrooms are very attractive to buyers because they can accommodate older guests and provide greater flexibility. Getting that third bedroom with adjacent bath would provide for the highest and best use. That's appraiser speak for more money. There are many ways ways to adjust the floorplan to incorporate both the need for a better laundry space, better living area, kitchen update and even another bedroom. You should post in the Building a Home Forum with a scale drawing showing measurements of the downstairs and ask for floorplan ideas. If you know the load bearing walls, that would be helpful to the discussion. Mark all the entries, doors and windows. You might be surprised about the answers. The Kitchen Forum can provide you with some ideas about your pending kitchen/bath renovation, too. This is what I would advise. Contact one or two experienced realtors about the local market and the prices between 2 bedroom 1.5 homes and 3 bedroom 2 bath homes. Tell them that you are not selling this week. But, you plan to sell in two to three years and want their input before you renovate. Be sure to ask more than one for their opinion. They will want to provide you with this information because they might get the listing when you are ready to sell in a few years. They will hope to build a future relationship. It will cost you nothing. Good luck with your decision.

Beverly (not sure how to reply directly, sorry about that!), our back yard doesn't need anything. We are looking to do a porch because we want a porch, lol. We have a very walkable neighborhood and love seeing people/dogs/kids going by. And the back gets really hot and sunny. As for dark, the master BR has a room darkening shade that is almost always down, but we have two more windows in that room that face south so I'm not worried about the room being dark. Thanks for all the pics - that's what I've been seeing while searching, but husband thinks the porch can join just above the door. I'm just not finding any pics of that, though. As an aside since I included a pic of the back of the house, anyone want to chime in on how we'd square off that back corner of the house with the existing small shed dormer? We're thinking of a ground floor addition but I would love more space upstairs to expand the bathroom (in the dormer) and the bedroom, too. No clue what to do with the roof lines. Thank you!

Some will depend on what type/generation of Cape it is. If it was built as a 2 bedroom with open space above, and homeowner creep built 2 bedrooms upstairs, then the ceiling joists could be insufficient for floor joists. So decisions on sistering vs platform above may affect your existing ceiling or replacing an inadequate stair might tear up a lot. Other things like HVAC, plumbing, and posts should be designed with the existing 1st floor layout to minimize intrusion anyway. Electrical shouldn't be a big issue in tearing up the 1st floor. Keep in mind 5 years can easily turn to 10, AMHIK.