Should I add a garage?

Question

Hi BP,

I just wanted to get your opinion/thoughts, because I'm not a very frugal person when it comes to spending money on myself.   I bought a  house in 2015 for $155K,  1100 sq ft -3/1 bath in Richmond in a really great school district, but it needed a lot of cosmetic upgrades.   My goal is to add 20% equity so I can get rid of the $70 PMI month on my mortgage, which I can apply to have removed in September 2017.   We have re-done the kitchen (upgraded appliances, painted cabinets, new knobs, etc), opened up floor plan, uncovered hardwood floors, and will soon be building better closets.

We are looking to add a garage,  probably will cost around $8K for a metal garage, and my finance loves tools, builds tons of things and does a lot of side jobs.  I have also always wanted a garage, and think we need it for extra storage.

Do you think it'd be a good investment to add to the house?  Anyone else have a similar experience?

Many thanks, and Merry Christmas!

~Linda

Colleen F. · Answer

If your fiancé is handy you could consider having him build it. My father built panels and then assembled a garage with assistance.  It allowed him to stage the construction and his cost outlay. He hired out electric and had a pad poured.   Here  a garage would add value as it adds to an assessment  probably more then upgraded closets.    Is it enough to meet your goal I am  not sure, you are looking to add $30,000 equity off of market appreciation, a modest kitchen remodel, and a garage,  that is a lot. I would not do it for that reason but because you will find it useful and it may add marketability when you are ready to sell.

Is PMI still removable? I thought there are new guidelines that for some loans it is now for the life of the loan but it could be only for some lending situations.

Kyle Hipp · Answer

What kind of dimensions is this garage? It sounds more like a storage/tool shed as opposed to a garage. I just build a 24x24 garage at a rental property of mine and built it by myself, outside hiring out the electrician and cement. This cost a little over $9,000. If you hire out probably closer to $15,000

Andrew Syrios · Answer

Financially, at that price point, I don't think it's a great financial investment. But if you're living there and want to have it, I think it would make sense in that respect. Especially since it will help you out and pay for probably most of itself. But for adding value to the property, I don't think it's probably worth it.

Linda S. · Answer

Thanks all for your comments and thoughts!   I think what I might do is get the concrete done in the spring, and have the actual garage built in the summer to break up the costs.    My finance is very handy, however we have our 4th house that needs renovating,so the investments override lifestyle right now.   Thanks again!

@Colleen F., PMI is removable on conventional loans,  but not on the FHA.

Should I add a garage?

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