Renting out a house AND the above-garage apartment

2 Replies

Hi everyone. My boyfriend is looking into buying a house (currently 2/2/2, easily converts to a 3/2/2) that has a 2/1 garage apartment. When doing analysis, should we assume rents separately and add them together? What I mean is this: do we look for 2/1 apartment comps and 3/2/2 house comps and add them together? Being new to REI, my concern is that the same people that would rent a 3/2/2 SFH are not the same that would be comfortable living with another tenant on the property and maybe we should assume the house's rent would be lower. On the flip side, maybe the apartment would rent for more than a typical apartment because of relatively fewer neighbors.

*I searched BP for another string with this topic and couldn't find it. If you know of one, please post the link for me. I'd prefer not to create double work for you if you've answered this question elsewhere.

Thanks!

HI @Lauren Keen

First, make sure you can rent out the apartment above the garage.  Some states and municipalities don't allow for residential units above garages anymore. Safety and fire concerns.  I'd hate to see you bank on being able to rent it out and it turns out you can't. 

Look for 2/1 comps and 2/2/2 comps. There are some people who won't like the idea of sharing the property with another person, but there are plenty of people that wouldn't mind.   Its about amenities and what the area can afford. You may want to treat it like a duplex for researching the 2/1. 

It's difficult to say if the conversion costs to a 3/2/2 would pay off.  When you get to 3 bdrm you are entering more family territory and I do see them in general being more possessive about the land, especially with you kids.  A 3/2/2 shared like that may be a deterrent and actually drive down the rent below what a normal 3/2/2 would be. 

Thanks, @Corina Eufinger . The property is technically a duplex in the county's eyes, so renting both is fine. Really appreciate your input!

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