Can anyone share some thoughts on whether or not to add a detached garage (and if so, what size) to our newest flip project? This is a small home in an older neighborhood in the incredibly hot Denver metro area market. Most similar homes on this street have a carport, though some do have a single-car garage. Some of the homes appear to have converted attached single-car garages to living space.
It seems that anything that hits the market here will sell--and fast! How does a detached garage impact appraised value? How important is a garage to buyers? Is the fact that ample room exists for the addition of a garage if the buyer chooses enough to make up for not having an existing garage at the time of purchase?
Thanks for any feedback.
In california the cost of the garage will be too much to see a return, and if the majority of the homes on the block have carports. i wouldn't get fancy with a garage, its just not necessary.
I bought a similar property to live in that I had wished had a garage after the purchase. The price to add one wasn't worth it to me as an owner and the houses I did look at with garages weren't much more expensive so I don't think you would get enough return to make it worthwhile especially with the time involved. Plus with Denver as hot as it is you should have no problem selling. You might have a problem once you up the price $20k+ because of the money the garage cost you though. Just depends on your market, I don't know what area you are talking about so I could be wrong.
@Donna Welschmeyer it's pretty easy to figure out. Do a price analysis and see how much a garage adds to the sale price. Usually it's not the cost. The only exception is a house without one in a neighborhood with them.
When I looked at this for a property the cost was about 2x the value added to the property.
Get it on the market and offer to add the cost of a garage to the sale price and build one for the buyer if they want. Be sure your garage price includes something for you. I doubt there will be any takers on the cost add.
It seems like a simple evaluation. Will spending money on a garage yield an increase in sales price? If you spend $5K on a garage, will you truly get more in sales price? Mostly likely not. I'd spend the money on the kitchen and bathrooms. You'll see a better return on your money if you spend it there.
In the neighborhood I do my flips in, appraisers give a 2 car garage 20k value, and it costs me $12,300 to build them, so its a no brainer.
The answer is in the data for your neighborhood
I know it's a fix and flip, but garage rents in Denver have recently skyrocketed. Building the garage for $12,300 and renting it for the current market value of $400/month yields a whopping simple ROI of 39%.
If that much extra rent pushes the project into "fix and hold for a year" you will make even more money.
Just to second Grant here, in most every one of our flips if it does not have a garage we will build it. We usually do an oversized garage, 20x23 so 460 sq ft. Our cost to build is generally around $15,000 but I am sure you could get it lower. Even if the buyer has no interest in renting it out I would expect to see a positive return from adding the garage.
Best of Luck!
Thank you all for your input! The experience any of you had with the ROI was what I was looking for as well as input about how much easier it might be to sell with a garage. I appreciate everyone's advice.
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