Should I upgrade my garage in my rental property?

General Real Estate Investing
8yFollow

Should I upgrade my garage in my rental property?

Kenneth Freire
Minneapolis, MN · Member since 2016 · 30 posts · 19 votes

Hi everyone, 

I currently live in minneapolis MN and my wife and I bought our first duplex back in july. 

It has a detached garage. It has a manual door and no electricity. 

We are trying to decide if we should upgrade the garage to an automatic door so future tenants can start using it. 

For the cost of an electrician and getting all the door upgraded it’s going to cost me around $2400-$2800. Is this worth me doing here in minneapolis?

1Reply
105 views

Most Popular Reply

John Woodrich
Flipper/Rehabber · Minneapolis, MN · Member since 2016 · 1k+ posts · 1k+ votes
8y

First - this isn't a winter project in MN.  The ground is frozen so it is hard and expensive to dig.

Second - Will you be able to get any additional rent in doing this?  Do similar units with garages rent for a higher price?

I do think that if you spend $2400 to run power to the garage and install an opener (cheap part) that you will get your money out of it in the long run, in most areas.  Whether it makes sense to do it now will depend on the numbers.  If your garage is one of those 1900 garages that looks like it needs a tear down this may just be the start of a $10k garage makeover and that may not make sense.

4Reply
See this reply in the discussion

18 Replies

Jump to latestLatest
  • Filipe Pereira
    Property Manager · Windsor Locks, CT · Member since 2016 · 1k+ posts · 1k+ votes
    8y
    Originally posted by @Kenneth Freire:

    Hi everyone, 

    I currently live in minneapolis MN and my wife and I bought our first duplex back in july. 

    It has a detached garage. It has a manual door and no electricity. 

    We are trying to decide if we should upgrade the garage to an automatic door so future tenants can start using it. 

    For the cost of an electrician and getting all the door upgraded it’s going to cost me around $2400-$2800. Is this worth me doing here in minneapolis?

     Good question. Let's reverse engineer it. How much more could you charge for rent if you had the work done? 

    3Reply
  • John Woodrich
    Flipper/Rehabber · Minneapolis, MN · Member since 2016 · 1k+ posts · 1k+ votes
    8y

    First - this isn't a winter project in MN.  The ground is frozen so it is hard and expensive to dig.

    Second - Will you be able to get any additional rent in doing this?  Do similar units with garages rent for a higher price?

    I do think that if you spend $2400 to run power to the garage and install an opener (cheap part) that you will get your money out of it in the long run, in most areas.  Whether it makes sense to do it now will depend on the numbers.  If your garage is one of those 1900 garages that looks like it needs a tear down this may just be the start of a $10k garage makeover and that may not make sense.

    4Reply
  • Josh July
    Roseville, CA · Member since 2017 · 73 posts · 24 votes
    8y

    Like @John Woodrich said if its a really old garage that doesn't have much life, then if I was you I would tear down and rebuild with electricity. Also, I think that even if you don't get higher rent you will most likely have more grateful and possible long-term tenets if your garage is hooked up to power. Think of it this way would you rather have to open your garage everytime you would like to use it or would you rather push a button and have it open itself? Happy tenets=pottentually long-term leases and higher resale value

    0Reply
  • JD MartinBusiness Member
    Moderator
    Rock Star Extraordinaire · Northeast, TN · Member since 2015 · 10k+ posts · 17k+ votes
    8y

    You know, most of the time I would say this is a waste of time, but you are in Minnesota and I imagine a garage would be in demand. As said above, how much more rent can you get for an operational garage? That should govern most of your decision. 

    Podcast Guest on Show #243
    Skyline Properties
    View Page
    1Reply
  • Ryan Schroeder
    Rental Property Investor · Saint Paul, MN · Member since 2016 · 46 posts · 37 votes
    8y

    I'd say if you can get $25/mo more in rent, which is perhaps near a break even over 10 years (depending how you apply your cost of money) I'd do it unless the garage itself is effectively too small to fit most cars or something like that.  Tenants will be much happier, their auto insurance will go down (probably) and it will make your property more marketable to tenants.  A new standard 2 car garage will cost around $20K as a comparison if you contract it out (and you may have site setback issues...your current garage is grandfathered in...a new one has to meet current code)

    1Reply
  • Bruce Runn
    Investor · Minneapolis, MN · Member since 2014 · 743 posts · 927 votes
    8y

    I have a duplexs in Uptown that I had the double garage with opener and electricity rented for $100/month to people from outside my duplex.  My single garage at the same place with no electricity rented for $75/month.  No investment and still cash flow.  When I rent to a tenant, I charge $50/month since Some people require a garage to rent a property and filling the apt, is the priority. 

    3Reply
  • Neil Hauger
    Residential Landlord · Houlton , WI · Member since 2014 · 56 posts · 35 votes
    8y
    Hi Ken. Congrats on the purchase. I live 35 mi east of u in Wisconsin. Own 5 rentals. Looking at my 6th, a duplex. I think your biggest consideration here is return on your investment. Anytime you can have a electric Garage door opener in our cold-weather especially with the temperatures we have now. It’s going to be a plus. But how soon will you recoup that cost of 2400 bucks. I’m betting that is a couple years. Secondly I would consider who my competing against.? Do the other rentals have this feature so it would then be a limiting factor for me to rent? I would test the market and see if it really makes a difference in your rentals rent ability. If I tenant complains about not having it and you hear that often enough then perhaps yes, you would spend the money. But if they’re not complaining then why bother. Keep the money in your bank.
    1Reply
  • John Woodrich
    Flipper/Rehabber · Minneapolis, MN · Member since 2016 · 1k+ posts · 1k+ votes
    8y
    Originally posted by @Bruce Runn:

    I have a duplexs in Uptown that I had the double garage with opener and electricity rented for $100/month to people from outside my duplex.  My single garage at the same place with no electricity rented for $75/month.  No investment and still cash flow.  When I rent to a tenant, I charge $50/month since Some people require a garage to rent a property and filling the apt, is the priority. 

    How do you separate the power usage for the garage from the people renting the duplex?  Do you have a separate meter or do you just pay all electric?

    I have rented garages but they were at houses I was hoarding, they needed a lot of work and I didn't have time to work on them.  

    0Reply
  • Fred Roth
    Real Estate Agent · Minneapolis, MN · Member since 2015 · 7 posts · 1 vote
    8y

    Ryan Schroeder made a good point above that a return of $25/month would make the $2500 investment worthwhile. That fits within the 1% rule for rental profitability.  Is this a two car garage serving both units?  If so, there would be a greater return on investment.  Even if it is an older, possibly "functionally obsolete" garage, a good part of the $2500 outlay would be for the service from the house to the garage.  This could be used for the garage replacement down the line.  The electrical service would also allow interior and exterior lighting at the garage/alleyway.  This is an important safety consideration, as alleyway assaults are a big problem in a lot of the parts of the city.  I think it would be a great asset which substantially improve the units' appeal to better tenants.

    0Reply
  • Bruce Runn
    Investor · Minneapolis, MN · Member since 2014 · 743 posts · 927 votes
    8y

    @John Woodrich

    I put the electrical for garages onto my first floor meter and I pay for electric as I would also have a shared laundry that goes to the 1st floor as well which can not be comingled either.  I essentially charge my 1st floor tenants $50/month more for rent but do not link it to me paying the electric so I essentially get my money back.

    1Reply
  • Bruce Runn
    Investor · Minneapolis, MN · Member since 2014 · 743 posts · 927 votes
    8y

    @John Woodrich

    My son in law had two garages that needed work and no electricity but after he looked at the cost of repair to make them nice versus the payoff, it was clear that it was a win/win for him and he had the work done.  He gets $50/stall for $1200/yr and it cost $1500 to fix them.  

    0Reply
  • Nick Danaluk
    Investor · Port St. Lucie, FL · Member since 2017 · 56 posts · 22 votes
    8y

    It may not be cost-effective in the short run, but will make it easier to resell in the long. FYI, when choosing a garage door opener, buy an Elite Series Liftmaster, either the 8550W or 8550. One is ceiling mounted and one is wall mounted.

    In addition to using traditional visor remote controls they can also be monitored via wifi and cellphone app. You can open and close them from anywhere in the world and see their status. They can also be programmed to shut after a certain time period in case you habitually forget to close the door. There is also a simple bypass to keep them open.

    The 8550W is a ceiling mount with belt drive making it very quiet. The 8550 mounts on the wall and connects to the roller. Good if you have the minimum wall gap at the shaft. It's only downside is it has a separate automatic lock on the door that makes a popping sound each time it closes.  

    They are not much more expensive than a chain drive, but a solid upgrade in class and well worth the money. Also use nylon rollers and you have a virtually maintenance free garage door.

    1Reply
  • Thomas S.
    Member since 2016 · 13k+ posts · 12k+ votes
    8y

    Decision should be made based on the dollars in the short term. Investments like this need to generate a immediate positive return to capture the expense back in a couple of years. If you make decisions to spend money based on a long term benefit before you know it you are not making any returns for 10 years down the road and may not hold the property that long. Selling will rarely recoup your expenses. Never plan based on long term returns on upgrades as they may not last.

    Short term returns should be your primary deciding factor. In this case it is very likely a waste of money.

    1Reply
  • James McCard
    Investor · New Hartford, CT · Member since 2016 · 282 posts · 104 votes
    8y

    I would do it. Although perhaps look at renting the garage seperately instead of to tenants. People who own motorcycles, classic cars etc are always looking to store stuff in a safe secure location. They are probably willing to pay a bit more than an average renter to park in a garage. 

    0Reply
  • Colleen F.Pro Member
    Investor · Narragansett, RI · Member since 2013 · 8k+ posts · 4k+ votes
    8y
    Unless you know you will get more rent I would be reactive, so if they ask find out what it is worth to them in $ more in rent. It is a detached garage so they have to go outside anyway.
    0Reply
  • Brad Schaeppi
    Attorney · Wayzata, MN · Member since 2016 · 70 posts · 134 votes
    8y

    @John Woodrich I agree with @Bruce Runn's method.  Tread very carefully with mixing meters and make one meter a flat fee that compiles with 504B.215.  There is a new bread of pro-tenant attorneys who file rent escrow cases based largely upon the ability to extract attorney fees--translation--a small damage dollar technical defect (shared meter) but you must pay big dollars to settle or to contest the case.  This is no joke.  I actively defend landlords on the meter issue.  504B.215 Subd. 2(a)c has a "failure" provision that links to 504B.221 and "reasonable attorney fees."  While there is discrepancy with the statute, I would not risk the cost of a full litigated trial to find out the answer.  If you receive a tenant notice about a shared garage meter (because you rent out to someone else), take it seriously and see what your options are to separate the garage electric (and subject to any garage lease you may have signed).  If the electric becomes 100% separate, the "violation" has been removed.  Good luck

    0Reply
  • John Woodrich
    Flipper/Rehabber · Minneapolis, MN · Member since 2016 · 1k+ posts · 1k+ votes
    8y

    @Brad Schaeppi I like @Bruce Runn's method, my question was to pull from his experience.  I don't have any rentals which aren't separately metered yet and if I get them I plan to run on the side of caution and will likely eat the utilities and increase rent as mentioned.  I have heard of the lawsuits you have mentioned on this site, previously I had no idea.

    0Reply
  • Kenneth Freire
    OP
    Minneapolis, MN · Member since 2016 · 30 posts · 19 votes
    8y

    Thank you everyone for your responses this def. helped. For now, we decided to wait on it until we have a little bit more cash and people become more reactionary to it. 

    Thank you @John Woodrich & @Bruce Runn for all your input. 

    0Reply
Join the conversationCreate a free account to reply, vote on answers and follow this thread.
Log InJoin for Free