I've noticed that it's not uncommon to see homes where the garages were converted into separate living space. The listing prices don't appear any different than homes w/ garages, so the owner isn't getting any price appreciation benefit. Does anyone know if the converted garage adds any markup to the rent? TIA
Real Estate Agent · Houston, TX · Member since 2020 · 23 posts · 37 votes
5y
Alex , you can think of garage conversation as double edge sword. First value during appraisal or selling, with a garage ups (no garage decreases value) the value of a home as opposed to not having garage. At the same time extra livable square footage increase the value of a home (value is decreased if you converted garage to livable space). If this home is being flipped it depends on the target buyer (do they prefer a garage or extra bedroom). You must study average number of beds in the area. So in this case of a sale/ appraisal it would be a even wash on price appreciation because your lose garage which would decrease value and gain sq footage which ups value.
In the buy and hold scenario separate from appraisal/sale, the converted garage serves as a positive when thinking bedroom count for rent increases. I always use section 8 payment standards for rent. For instances in 30305 zip code section 8 pays $2,178 for 3 bedrooms and they increase rent to $2,662 for 4 bed rooms. So in this scenario having the converted garage (extra bedroom) has a bigger ROI and demands higher rent.