Building a Garage for Cashflow....

[dwb]

Hi,

My current property is an older home located on a very large lot. There is no garage currently. The backyard is one of the biggest backyards I`ve ever seen in Ontario.

My plan all along was to build equity, then eventually tear down the current single family home and build a four or five plex - there`s more than enough room on this huge lot. That`s about 15 years down the road though...

Anyways, I was thinking for now that I could build a nice big double garage and rent both sides out for approx $150-$200 each. I have about $20,000 in cash set aside to invest in this construction of a detached double garage.

Was wondering if anyone has any experience with this sort of thing and what the procedure looked like and how you made out and found the whole process... was it worth the effort? Any insight? Anything you would avoid etc...?

Thanks in advance for your replies.

 

[invst4profit]

I personally have no experience with this type of thing but before spending 20,000 you might try running an add in the local paper "garage for rent X$/month" to measure the local market.

 

[jarrettvaughan]

QUOTE (dwb @ Jan 17 2008, 11:41 AM) Hi,

My current property is an older home located on a very large lot. There is no garage currently. The backyard is one of the biggest backyards I`ve ever seen in Ontario.

My plan all along was to build equity, then eventually tear down the current single family home and build a four or five plex - there`s more than enough room on this huge lot. That`s about 15 years down the road though...

Anyways, I was thinking for now that I could build a nice big double garage and rent both sides out for approx $150-$200 each. I have about $20,000 in cash set aside to invest in this construction of a detached double garage.

Was wondering if anyone has any experience with this sort of thing and what the procedure looked like and how you made out and found the whole process... was it worth the effort? Any insight? Anything you would avoid etc...?

Thanks in advance for your replies.


In My community the City is pushing the building of Carriage Homes which is a 2 car garage with an apartment on the second floor. We have seperate zoning for this and it is very simple to get the property re-zoned in order to make this happen.

It may be worth your time to speak to the city regarding this idea as it could generate an aditional $800.00+ per month in rental income. Since you are already planning to build a garage, what is another 15-$20,000 for a significantly greater cashflow. If the city is on board with densifying its population, a Carriage Home can be a great option.

 

[dwb]

Thanks for your responses.

Love the idea of a Carriage Home, but the City of London won`t allow it. Fantastic idea though & something I`ll consider for another property in another town that allows it. Thanks again for the suggestions.

I`ve did a little prelimanary research on garage rentals and there seems to be some demand here. Not an overwhelming amount of demand of course, but enough to make this work.

Before I start contacting contractors and builders about the construction of this detached double garage, is $20,000 too low or too much to expect to pay for it to be fully constructed?

 

[JeffSmith]

I don`t have building knowledge in your area, however the price seems to be a little high.

If you are building the garage for income I would treat the garage as a separate investment property.

For example: Could you borrow the $20,000. and have the income from the garage support the payments. Cash is king.

 

[VHMay]

QUOTE (dwb @ Jan 18 2008, 07:01 AM) Thanks for your responses.

Love the idea of a Carriage Home, but the City of London won`t allow it. Fantastic idea though & something I`ll consider for another property in another town that allows it. Thanks again for the suggestions.

I`ve did a little prelimanary research on garage rentals and there seems to be some demand here. Not an overwhelming amount of demand of course, but enough to make this work.

Before I start contacting contractors and builders about the construction of this detached double garage, is $20,000 too low or too much to expect to pay for it to be fully constructed?

Hi DWB,
I just prepared a budget for the construction of a double detached garage for an Edmonton area builder and it came to $14,000 (their cost). Keep in mind that the builder will also "mark-up" the cost when selling to a client so I would allow extra for this. $20,000 does seems high.

 

[GarthChapman]

I have been building double garages over the last year or so for on average $14,000 also, including the concrete pad. I act as my own general contractor to get my cost down to this level. This means that I hire and manage:
-Building permit
-Concrete cribbing
-Concrete pour
-Buy all materials (lumber package, O/H door opener, shingles, siding materials, etc)
-Framing crew
-OH door installation (important to get it right)
-Electrician (includes digging trench to house, wire garage and connection to power.

I would expect to pay something north of $16,000 to $17,000 to have someone else do all that for me.

One thing to consider when adding a garage to a property is whether it may put the total rent on the high end of the market for that property type, and thereby increase vacancy. Of course the alternative is to rent the garage to a third party, but that model comes with higher vacancies also.

We generally find that the $14,000 spent creates an addition to the value of the property of from about $18,000 to $25,000, so on the equity end it is almost always a winner.

Hope that helps a bit,