Help! Converting a Workshop/Garage into an Apartment Unit

14 Replies

All,

I currently live on 5 acres of land with my home towards the front of the property and a 960 square foot workshop/garage about 160 feet behind my house. The workshop/garage has gas, electric, water & sewer running to it all metered as part of my home (Not separate). 

My father and I are considering converting this workshop/garage into a rental apartment since it is just sitting there not being used for anything.

What are some potential issues you see with this idea? I specifically have questions about:

  • Rental Inspections
  • Insurance/Insurability
  • Setting up an Address for the apt (123 Main Rd A & 123 Main Rd B?)

All of your help is greatly appreciated! Thanks. 

Bump

When I converted my garage, I found out that I must have a working garage or a carport. So if I converted my garage to a living space, I would have to build another designated garage/carport. Otherwise, the lender is not going to want to finance it as a regular mortgage. So it would be difficult to sell.

You also may want to check the zoning and what that allows. It's usually not a problem if you stay low key. But if someone reports you or if you want to sell the place, you may have to convert it back.

Every city is different. Those are just what I've seen.

@Fay Chen

Thanks for your input. My father and I are thinking of building a separate garage for the new tenant anyway, most likely NE of the workshop in this picture. 

The thing is...this workshop is on the same parcel as my actual residence. I am thinking about just doing this project with straight cash, no financing. 

Also, what do you recommend regarding insurance? This is technically a workshop, not a residence... 

My land is zoned multifamily fyi

I recommend getting a sub-meter if your utility company allows. That gives you the option to billl your tenant for utilities and better track the expenses.

Looks like you will need a driveway as well. 

Originally posted by @Marko Z. :

@Fay Chen

Thanks for your input. My father and I are thinking of building a separate garage for the new tenant anyway, most likely NE of the workshop in this picture. 

The thing is...this workshop is on the same parcel as my actual residence. I am thinking about just doing this project with straight cash, no financing. 

Also, what do you recommend regarding insurance? This is technically a workshop, not a residence... 

My land is zoned multifamily fyi

I'm not an expert on insurance. If you convert it into a residence, then it's technically a residence. I have the wrong kind of insurance on my rental too. I have an owner's policy, but I actually lease it out. From what I've learn on the forum, you want to have the right policy. If something happens, you will be covered.

Forgot to mention, I had to get a business license in my city for the rental as well, because my neighbor reported me... My city was cool. Some may not. I recommend building a good relationship with your city inspector. Mine helped me a lot during my remodel.

@Fay Chen Thanks for the head's up!

@James Wise

The driveway has been accounted for in the budget. This is an old aerial, the new drive is concrete :) 

Sounds like you are all set up to convert it and make it a legal ancillary dwelling. I would look into doing it that way and not try to fly under the radar.  Down the road if you want to sell you would then be in better shape. We did not have a problem with multiple dwellings on one parcel, we did not need to subdivide  it was sold to us as a parcel. Insurance was one business policy. While it was hard to get insurance it was not due to the multiple dwellings. 

Just check out your local code. It will impact property tax.

@Colleen F.

 Thank you for your input. I will do some more research regarding the insurance once it passes as an ancillary dwelling

In the over 30 years I have been working in residential construction I have found that your local building department is the first place you will want to consult with and find out if what you are proposing would be legally allowed. Once you find out that you can do it legally you will want to consult with them about all the building code requirements of your converted or new unit. Then you will want to set up a consult with your local utility company to find out if they can service a new and additional unit where you are located. You should find out from your local building department if they will accept what is known as standard construction plans or if you will be required to have them produced by a licensed architect and licensed structural engineer.

Usually if your city will approve your proposal the electrical and gas meters will be installed , after your inspections have been approved. This is for separate metering. What you may find difficult is in getting a separate water meter. Those will usually be very expensive if you can get one. In my experience you usually end up paying between $4,000.00 and $8,000.00 for a new water meter installation. The alternative is to keep things on the same meter as you have now and work out some kind of arrangements with a renter if that is what you have in mind to include the water in the rent. 

The one question you should ask yourself is if you are knowledgeable and skilled enough to handle all the construction on your own or if you will be better off having a licensed general building contractor do the work for you. General building contractors will also act as project managers only and make sure you build everything according to code and will pass inspections. 

Once you work out all the numbers if you find out you can do it legally then of course check with your insurance to see what kind of policy you will need to have the new or remodeled structure properly insured. 

Then you should compare all the time, work and expense involved with simply purchasing a separate rental unit located at a different location. You may find it can take quite a while before you cover everything and can have the proper building permits, the construction and a finished unit ready to rent. 

Ask if what you propose will be accepted as a remodel or considered new construction, there is a very big difference in what your experience will be with your project and the over all cost and time involved. The open or covered parking requirements will be covered by you local building department. Think of what you want to do and what you will have to do legally, your overall costs and the over all time and effort involved and again compare that to simply buying and managing an existing rental unit comparable to what you propose. 

It seems to me that you simply want to do something to generate some rental income but consider other things such as will anyone want to live where you live and want to rent your unit. Ask yourself if there are other rentals in your area and has anyone else you know done a similar project that worked out for them well. 

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@Gilbert Dominguez :

Gilbert,

Great insight, I learned some new things.  Thank you!

Marko,

Good luck with your conversion! 

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