Can anyone help me make an investment decision?
Recently I purchased a SFH in a small, rural neighborhood in Statesboro, Ga. The house is a 3 bedroom, two bathroom 1200 sq foot starter home on 3/4 an acre of land with no carport or garage, only a paved driveway. The neighborhood consists of about 8 houses that are built exactly the same (all without a carport or garage).
My intention is to live here for a year and use it as rental when I purchase another home next year. I have been working to add value in the house by improving landscaping and making small fixture upgrades. I bought the house for $80,000 and it was appraised for $98,000.
I am trying to decide if I should purchase a metal pre-fab carport for the house (one from the linked brochure). The carport would cost $800 plus $500 for installation without closing it in or $3,500 plus whatever it costs to prepare the site, build a concrete floor, and do a few small finishes on the inside (power, lights, etc.).
If I am going to use the house as a rental, will I get enough value by adding an external carport or garage to pay me back? Has anyone added an external building to a rental
Thanks in advance!
Hi @Caleb Mock ,
I don't have a concrete yes/no answer, but this information that just came out was super helpful when I was making decisions ... The largest return regarding renovations from Realtor Magazine. Carport is definitely not on the list, and here is an article that says a garage has a 62% return on investment and therefore you should consider it over a carport.
This is in Georgia, correct? I would say a car port may make sense if you're in the North East, but not sure it makes sense based on where you live. Hope that helps!
You haven't mentioned what sort of rent you can command, and what the difference would be if you had a garage vs a carport. To me, that is how to assess the investment/return.
Dana, that's a great point about the resale ROI. The cost of a garage is likely outside of my price range. The house is in Georgia. Other than a few weeks in Winter, people usually use garages as attached storage spaces/workshops around here. You're a property manager, do garages usually attract better or longer term tenants?
Eugene - The market rent in my area most 3 bedroom/2 bathroom houses is around $950, carports or garages don't seem to add to the monthly rent. However, most of the rentals on my street are rented by part time landlords for less than market rates.
Statesboro is a college town and most of the houses around me are rented to college students. I'm trying to attract young professionals to the house and reduce expenses related to turnover.
By the way, thank you both for the time.
I'd try to rent it without it.
at most, go to HD and get a Sutter home or whatever it's called plastic shed for 650 bucks. install it yourself. there u have a storage unit
If your home is close to Georgia Southern Univ, and it's configured with multiple bedrooms for students, I would think you would have to really "sell" the idea to students why to choose your home over another on hte same street, if all the homes around you are already rented without car ports or garages. You have to be careful about over improving. If you want the carport for yourself, and see the value added for long term appreciation down the road- then I would consider it. Both my daughters are in state schools (UGA) and just park outside without any thought of a garage. Perhaps improving items in the home would add more value in your area? Just suggesting... look into new appliances, maybe granite countertops when the other rentals do not have it? That sort of thing might appeal to students - and it may cost less.
@Caleb Mock I personally think the open carport will NOT add any value to your rent. If you are charging the same price as others, then it could make your property more appealing.
I will say that I believe that garages are a selling features and could command more rent, though not much, maybe $25-50/month. But as mentioned, that is outside of your budget.
it's Georgia . You don't need a garage. Put the money into upgrades that will get you more rent or longer tenants
What kind of upgrades will help with the long term tenants?
In my experience stand-alone carports like what you are describing actually detract from the look and value of the house. An integrated carport is a little different story, but frankly none of my rentals (to date) have a garage and I've never had a single person suggest their objection was lack of covered parking. In that price point and that neighborhood my opinion is that it would be a waste of money as far as an investment.
Upgrades that help keep long-term tenants, in my experience: decent counters & cabinets, a fenced-in yard (privacy with landscaping a bonus), off-street parking, flat outdoor entertainment space (deck, patio, etc), low utility bills, central heat & air, dishwasher, no carpeting (hardwood or laminate floors), main floor washer/dryer hookup, good storage (clean dry basement/attic, storage shed, etc) . Outside of that, you can do niceties like fancy faucets, but you can't really change the important things - location of the house on the lot, safety of the neighborhood, proximity to work/shopping, noise & pollution factors, etc.
1st of all, congratulations for being proactive and forward thinking. In that area, based on what I've seen there. (Husband once worked for Gulfstream) While there, and based on what I saw when we purchased our rentals...I believe mid-grade SS appliances, updated fixtures, inexpensive granite counters, and mid-grade hardwood and/or tile floors will appeal to the broadest audience and will get you the longer-term professionals. Soft to medium grays for wall paint colors look very soothing and contemporary; and wood (like) blinds will offer you the best ROI. We actually had a tenant there who was a professor at Georgia Southern. We went to a pool party of a fellow co-worker and she was there, along with her husband who we found out worked in another dept @ Gulfstream. It's a tightly knit community and you should do well with these upgrades. The items mentioned above are the new neutrals. (I'm an interior decorator also, and stage my own flips.) That type of home doesn't warrant high-end upgrades; but with these upgrades, you will have renters (of all types) clamoring for your property-hence better rents. Hope this helps a bit. All the best to you!
@Caleb Mock , I'm from Statesboro as well. If you're looking for more of a younger professional crowd, I would just make certain things that wouldn't necessarily attract a college aged tenant. Mention no partying and whatnot when showing the home. As far as upgrades, I personally think a deck would be more appealing than a carport and would be around the same relative cost if you can do some of the work yourself. Georgia Southern is a good place for some young professionals, especially with the hospital, and nurses make good tenants. They're usually clean and can always pick up a shift if they're lacking money. Just make sure to do it all legally and not get into trouble with fair housing laws. I think the most important thing is location. If you're surrounded by a bunch of college student homes, that's what you'll attract here. If the neighboring houses are less like that, it'll draw more professional, possibly long-term tenants. I can say that with confidence!
Thank you for the advice everyone. You have all talked me out of buying a carport now.
Cynthia - Thank you for the relevant decorating advice. I was going to ask about wood blinds in a different post. I think that you saved me the trouble! I could probably do the changes that you mentioned for under $5,000 by DIY'ing paint and tile. The house is a 2007 house with basic finishes. What kind of monetary benefits (i.e. rent increases) have you seen from the mentioned upgrades?
@huntergroover - The property is out in the country (close to Planter's Row on Harville Road) on a 1 acre lot. I can't quite get a feel for what kind of tenants the neighborhood will support. My neighbor's are a mixed bag and I can't get a feel for what the area might attract. The neighbor's include a coach and his wife, a truck driver (who parks his big-rig in the driveway), two families with small children that play in the streets every weekend, and a group of college students. Are children playing and parked trucks a turn-off for the young professional crowd?
I like the idea of focusing on the backyard. We plan on installing a stone/paver patio and fire pit (away from the house). The lot was originally a huge open space but we fenced it in and are focusing on making the backyard feel like an extra room in the house.
Thank you all again, this discussion is great help.
@Caleb Mock , that's a really good location. Planter's Row is known to attract college kids. Burkhalter Plantation is as well, actually pretty heavily there. I know where you're talking about, though. It shouldn't be too much to worry with, I had a friend rent a home for 6 months in that area. Definitely not a huge section of town where a bunch of parties get involved, once you get outside of Planter's Row and Talons Lake. If it comes down to the possibility to renting to a younger crowd, just get parents to cosign with them and put in a security deposit. I would be confident in that area.
I live and invest in a much smaller college town, Americus GA with Georgia Southwestern, and when I first began, I figured college students were going to be my target market. Now, although I do rent to some, I try and get young professionals because of the turnover.
All of my properties have wood/tile/upgraded vinyl flooring, granite counter tops, dishwasher, deck, and upgraded fixtures. I have been very successful with this. I go to Lowe's weekly and check out clearance items and stock pile them for my next project. Almost none have a carport -- it's needed in Georgia when you get older and don't want a hot car or the paint to fade -- but I don't think young people see the need.
I also put a deck on all my houses as someone else noted.
I just finished my latest project, rented it, and was asked to their open house. It was funny because I bought a $400 light fixture that I got for $70 in the kitchen, and I had about 10 comments about how great it looked. I also had several people ask me about my latest project and if they could rent it. This confirms my thought that spending a little extra, especially when you get a great deal, is a good idea that sets my properties apart from my competitors in the area.
"What kind of upgrades will help with the long term tenants?"
IMO, competitive rent, safe housing, and good client relations help keep tenants in your properties long term. For some reason, I notice many landlords focus a lot on the building and less on their service. In my experience, people will move into your unit because of location, price, and cleanliness. They will stay because their landlord is awesome.
I don't think you will see a return for a long time on your "carport" investment. I mean how much can you really raise the rent for a house with a carport vs no carport, that someone would realistically pay? Then divide your total carport cost by the increase in monthly rent, and the result is the number of months it will take to re-coup your carport investment. You can decide if it's worth it to you.