Renting a Garage - what do I need to know?

14 Replies

Hello BP!  Been awhile since I posted.  We have been very busy with our 2 duplexes we purchased within a week of each other! 

Anyway, our one duplex actually has a 4 car garage (2 2-car garages for each unit) and it also has an additional narrow garage along the back that goes the length of the building (approx. 12x45-ish... didn't measure, could be slightly bigger).  Anyway, we are going to rent this additional garage space out for additional income on the property.  Planning on charging $200/mo because of the size but what should I know about renting a space like this?  Do I really need to screen the renter?  Should I require a 3 month lease or is month to month pretty standard?  Should I require a deposit of any kind?  Do I need to draw up a formal lease for them to sign or can I find one somewhere?  Also any wise words would be nice.

Thanks!

podcast number 88 w/ Matt and Liz Faircloth talks briefly about this idea (more of office space in a large building). 

 YES I would screen the tenant because their presence may or may not affect the other tenants who live IN the duplex.  What a shame it would be to have that space's tenant run off your good tenants. 


A lot of storage units are month to month, so that may be reasonable. Also, if the renter of that space gives you notice, how much preparation is there to get it ready for the next individual? a day maybe to sweep the floor +/- paint...

Yes, I would always do a formal lease, otherwise there is no layer of protection for you.   
To answer the deposit question: personally, I don't think I would charge a deposit for this storage space...especially w/ only $200 month.   Chances are if your tenants know about this space coming up, one of them is going to rent it anyway ( I would if I was renting 1/2 a duplex).  Just my 0.02...

Try and rent to one of your tenants. Makes life easier.

@Sarah Miller good idea to rent out the extra space. Be aware that you are now need a lease the is based in the lien laws - not the landlord tenant laws.

Read up on the lien laws in your area. You could cheat by grabbing a contract from your local mini storage.

You are entering the arena where you can lock out a non paying storage tenant and sell off their things. For that reason, I like the concept of not renting the space to your resident.

Sarah, 

Al is Absolutely Correct, so I'll summarize in Bullet fashion: 

1.  It's a Rental Agreement, not a Lease - you can get one from your attorney, or the Self Storage Association IN YOUR STATE (they are state specific) 

2.  No Deposit - a one-time, non-refundable Admin fee. 

3.  Like Al said, the beauty of Self-Storage is that it is SELF-STORAGE - DO NOT keep a key, or permit yourself to have access - otherwise, you create a bailment (liability) and you negate the protection of the lien laws, which permit you to lock them out, and auction their stuff off if they don't pay. 

4.  Month to Month is Standard

5.  We "screen" by obtaining their Rent up front, and gather ALL their info, copies of Driver's license, employment, emails, etc.  At the end of the day, your protection is an ironclad lease, and the lien-laws, which provide the ability to lock them out and sell their stuff. 

Welcome to the BEAUTIFUL world of Self-Storage! 

Cheers, 

Originally posted by @Scott Meyers :

Sarah, 

Al is Absolutely Correct, so I'll summarize in Bullet fashion: 

1.  It's a Rental Agreement, not a Lease - you can get one from your attorney, or the Self Storage Association IN YOUR STATE (they are state specific) 

2.  No Deposit - a one-time, non-refundable Admin fee. 

3.  Like Al said, the beauty of Self-Storage is that it is SELF-STORAGE - DO NOT keep a key, or permit yourself to have access - otherwise, you create a bailment (liability) and you negate the protection of the lien laws, which permit you to lock them out, and auction their stuff off if they don't pay. 

4.  Month to Month is Standard

5.  We "screen" by obtaining their Rent up front, and gather ALL their info, copies of Driver's license, employment, emails, etc.  At the end of the day, your protection is an ironclad lease, and the lien-laws, which provide the ability to lock them out and sell their stuff. 

Welcome to the BEAUTIFUL world of Self-Storage! 

Cheers, 

Thanks for all of the great advice!  One question though, if I do not permit myself to have a key, how am I supposed to lock them out or be able to get in without breaking a window/garage door/heavy man door??  Also, is there typically a 'waiting period' of non payment before I can lock them out and sell their stuff? (an entire month? 2 months?)

Originally posted by @Sarah Miller :

Thanks for all of the great advice!  One question though, if I do not permit myself to have a key, how am I supposed to lock them out or be able to get in without breaking a window/garage door/heavy man door??  Also, is there typically a 'waiting period' of non payment before I can lock them out and sell their stuff? (an entire month? 2 months?)

Drill the lock or call a locksmith.  Either way, the cost of gaining access and replacing the lock would be added to the tenants costs.   If it has a garage door, put a hasp on it and allow the renter to use their own padlock.

Sounds good. Thanks! Hopefully I can get a renter because it will really increase my cap rate!

Originally posted by @Roy N. :
Originally posted by @Sarah Miller:

Thanks for all of the great advice!  One question though, if I do not permit myself to have a key, how am I supposed to lock them out or be able to get in without breaking a window/garage door/heavy man door??  Also, is there typically a 'waiting period' of non payment before I can lock them out and sell their stuff? (an entire month? 2 months?)

Drill the lock or call a locksmith.  Either way, the cost of gaining access and replacing the lock would be added to the tenants costs.   If it has a garage door, put a hasp on it and allow the renter to use their own padlock.

Sarah - DO NOT DRILL THE LOCK OR CALL THE LOCKSMITH - as Roy has suggested (another reason to be careful where you get your advice).

You put an OVERLOCK on it - meaning, you place a second, additional lock on the garage so that it has to be removed in addition to his.

As for the timeframes: rent is due on the 1st, late on the 5th, on the 6th, you overlock and begin the lien process. Most states give 90 days before auction - at which time you continue to charge rent and late fees, then sell their stuff to cover the cost.  

Originally posted by @Scott Meyers :

Sarah - DO NOT DRILL THE LOCK OR CALL THE LOCKSMITH - as Roy has suggested (another reason to be careful where you get your advice).

You put an OVERLOCK on it - meaning, you place a second, additional lock on the garage so that it has to be removed in addition to his.

As for the timeframes: rent is due on the 1st, late on the 5th, on the 6th, you overlock and begin the lien process. Most states give 90 days before auction - at which time you continue to charge rent and late fees, then sell their stuff to cover the cost.  

Sarah:

Scott is correct in that you should check and follow the law in your local jurisdiction.  In my initial response, I focussed solely on the regaining access element and not the procedural requirements.

Scott: 

On a commercial/storage rental here, we do not have a 90-day wait period.  Our garage/storage rooms have a second deadbolt/lock which we simply lock when rent is late {rent is late on the 2nd of the month, we lock on the 4th} and there has been no contact from the tenant.  After 30-days we can change the locks /remove the contents.

But it is a good reminder, to highlight the need to confirm to local jurisdictional laws/requirements when responding.

Here's the law for Ohio Sarah: http://www.storagelienlaws.com/index.php/14-self-storage-lien-law/20-ohio-storage-law

Originally posted by @Scott Meyers :

Here's the law for Ohio Sarah: http://www.storagelienlaws.com/index.php/14-self-storage-lien-law/20-ohio-storage-law

Scott, thank you.  I am saving this link.  However, I am still confused as to how I am supposed to open the garage if I do not give myself a key?!  If I do have a renter who is 60 days late with rent, and I put on an additional lock, and I want to sell everything inside to satisfy the lien, do I have to just hope the renter will come and take THEIR lock off so I can get inside?!  That seems a little absurd and asking for confrontation/non-compliance.   

@Sarah Miller The following is from the Ohio law link from above:

Title [53] LIII REAL PROPERTY

Chapter 5322: STORAGE FACILITIES

5322.01 Storage facility definitions.

As used in sections 5322.01 to 5322.05 of the Revised Code:

(A) "Self-service storage facility" means any real property that is designed and used only for the purpose of renting or leasing individual storage space in the facility under the following conditions:

(1) The occupants have access to the storage space only for the purpose of storing and removing personal property .

(2) The owner does not issue a warehouse receipt, bill of lading, or other document of title, as defined in section 1301.201 of the Revised Code, for the personal property stored in the storage space

"Self-service storage facility" does not include any garage used principally for parking motor vehicles, any garage or storage area in a private residence, an establishment licensed pursuant to sections 915.14 to 915.24 of the Revised Code, or any property of a bank or savings and loan association that contains vaults, safe deposit boxes, or other receptacles for the uses, purposes, and benefits of the bank's or savings and loan association's customers.

If I'm understanding this correctly, then most of the advice above relating to Self Storage would be incorrect. You should probably either do more research for your state laws regarding a garage/residential storage area or consult an attorney. 

Good luck.

thanks for pointing this out Jim!

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