Rental Property Investor · Boston, MA · Member since 2015 · 19 posts · 23 votes
Hey everyone, I am seriously considering building a 3 or 4 bay garage to rent for storage... I purchased a duplex in Salem Massachusetts about 6 months ago and it has a good sized lot which would be perfect for a garage in the back of property... How the lot is situated would allow the garage to have its own street frontage and independent access. The neighborhood itself is pretty cramped and congested so I believe my neighbor's would be interested in renting some of the bays as well as my tenants... I would probably attempt to rent out a couple parking spots to the neighborhood as well. If anyone has suggestions or experience with this issue it would be great... I wonder about profitability, what kind of garage to build and also if you would bring the entire property value up... Thank you
Investor · Woodbridge, VA · Member since 2015 · 476 posts · 197 votes
10y
I would save at least one bay for each tenant. You will attract a lot more tenants and be able to get slightly higher rent if you offer off street parking as part of the unit rental.
Other wise I would say you are well on your way to making some extra money.
Investor · White Lake, MI · Member since 2013 · 165 posts · 41 votes
10y
Great idea, Eric! I have been considering the same strategy for future rental purchases. I like the idea of having a captive audience of tenants and the mix of apartments and storage units. It should be a pretty easy ROI calculation.
From my very limited knowledge of storage units, smaller units rent for more dollars per square foot, so they should have a better ROI.
Investor · Woodbridge, VA · Member since 2015 · 476 posts · 197 votes
10y
I would save at least one bay for each tenant. You will attract a lot more tenants and be able to get slightly higher rent if you offer off street parking as part of the unit rental.
Other wise I would say you are well on your way to making some extra money.
Great idea, Eric! I have been considering the same strategy for future rental purchases. I like the idea of having a captive audience of tenants and the mix of apartments and storage units. It should be a pretty easy ROI calculation.
From my very limited knowledge of storage units, smaller units rent for more dollars per square foot, so they should have a better ROI.
Hey Brad, Help me out here for a second.. I figure each bay of a four bay garage to rent for $200.00 a month, so that adds to $9600.00 yearly.. also I figure a vacancy rate of 10% so that yearly income becomes $8640.00... Now my construction cost for the sake of this calculation is $40,000.00........ $8,640.00 divided by $40,000.00 equals= .216 which is a 21.6% ROI? If this is correct I think it is a no brainer right? Also I realize I havent factored in electrical monthly costs if I pay for that... That seems alot better than typical multifamily ROI... Also I believe it will raise the entire property valve which would be great...
Investor · White Lake, MI · Member since 2013 · 165 posts · 41 votes
10y
Hi Eric,
You got it! That is why this makes so much sense. Just add some expenses like maintenance (5-10% of rent), taxes (since they will go up for your rental a bit), added insurance, and electricity. You should still be over 15% ROI. Imagine if you refi your rental and only have to put 25% down on the garage, you can probably get 60% or more ROI!
Those garages will be OK for cars but storage, forget it. I've got many basements filled with "storage" goods that no one seems to know from whence they came;-(
Insurance Agent · Nationwide · Member since 2014 · 2k+ posts · 1k+ votes
10y
@Eric D.@Brad T. to make it even better, some insurance policies will have a "other structures" coverage as a throw in on the policy. So you could already have coverage at no additional cost.
Also, from a liability stand point, you may need to add this additional exposure to the policy. But there is a good chance no additional cost here either.
Investor/Accountant/Builder · Meno, OK · Member since 2014 · 1k+ posts · 918 votes
10y
Have you thought about zoning. Site plans. Permits. ADA requirements.
It was like pulling my own teeth to get approval from my locality to build a 70x15 mini stg building and a 80x50 maxi storage building on my own commercial lot.
I spent $7800 for the Engineered Site Plan, drainage study before the City would approve the plan. Then the building permit. And they want everything to be ADA compliant-the entire lot, and the other buildings. It took several months until all hoops were jumped thru.
Lender · Westfield, NJ · Member since 2010 · 85 posts · 23 votes
10y
Parking and storage is a nice amenity but you need to confirm that the town will grant the necessary building permits to add such a structure. Best of luck.
Realtor · Beverly, MA · Member since 2015 · 108 posts · 19 votes
10y
I agree with others. Before you get to jazzed up I would take a stroll down to city hall and talk to the building dept to make sure this is even doable and/or economical.