adding garage to duplex for flip

16 Replies

Just bought a duplex to renovate in Uptown in Minneapolis (Hip area) and it doesn't have a garage.  Since most duplexes are bought by investors, is it worth the $15,000 to put in a 2 car garage?  I get it makes it more marketable but really only  adds  $50/stall to rent/income.   Thoughts?

This is an interesting question in which I am looking to possibly do in a live-in duplex house hack. Will follow this to hear feedback.

Well, just using the numbers you gave it would take 12.5 years ($15k/$1.2k) to just break even and then you have the lost investment income from the $15k for that time, so from a pure investment standpoint I would suggest against the garage.

One intangible to consider is whether the garage will help you attract a better quality tenant. People who drive nicer/newer cars may not even consider a house without a garage.

I know the return isn't there but I'm fixing it up to sell it.  I can figure the $15,000/1,200 but I'm more interested in if I'd get my money out in selling it to an investor

I remember uptown's lack of parking when I lived  there. This was around 2000? And I paid 60$/mo for an underground parking spot when one opened up in my building (there was a wait list). But I was right off of the lakes and I had to park blocks away. It was a pain. I owned a duplex in Linden Hills near Lake Harriet and rarely did my tenants use the garage there. They'd park in the street but it was easy to find a space on the street. 

If your particular street has decent off st parking space, perhaps it's not worth your while to add the garage. Plus, snow removal would be an added expense if you are also adding a driveway...

Originally posted by @Jerry Bredesen :

One intangible to consider is whether the garage will help you attract a better quality tenant. People who drive nicer/newer cars may not even consider a house without a garage.

 As a rental it might also increase the time a tenant stays. 

Originally posted by @Bruce Runn :

I know the return isn't there but I'm fixing it up to sell it.  I can figure the $15,000/1,200 but I'm more interested in if I'd get my money out in selling it to an investor

 Study the comps to see the price difference, also days on market.  

This is really a local market question. Building a garage in one neighborhood may be a worthwhile investment while building it in another may not. Ideally you would have done this analysis before you purchased the property. Are you using the same realtor to relist the property after the renovation is complete?  Selling to investors versus selling retail are two completely different markets.  I would figure out which potential buyer brings the best return and the quickest sale time for you. Knowing your comps as Jon mentioned is a good place to start. Your realtor should be able to help you with this. 

I own a tri-plex in the uptown neighborhood. I would lean towards building a garage. This may attract more interested owner occupants that may pay more for the property than an investor would. Also, I would think you could rent out the garage for at least $75 per stall. I would say there is a good chance you will get your money back and it should be much easier to sell (I'm an agent as well). 

Cheers, Sawyer 

Thanks for the input.  I got the duplex for a very low price so whether it had a garage or not was immaterial relative to my buying as I should be able to can make $50-$60,000 on the flip.    I'm trying to buy a single family home as well for a flip that doesn't have a garage but would put one there as I think it's essential for a single family flip.

The comments on whether an owner occupy buyer would be interested is very valid and could open to more potential buyers if the garage would be there.  There is  parking in the back for 3-4 cars so the off street need isn't as great but I've also had tenants for my other properties take a pass if it didn't have a garage.  I own 7 other places in Uptown so I know the area very well.  There are few comps to compare where the garage is the difference but  90% of the places have garages.  I just know as an investor, it wouldn't turn me off on buying the property if the cash flow is right but I also know that my approach isn't the same as everyone else and why I'm asking for input.  How much does a garage weigh into consideration when you buy investment property or is it strictly cash flow/possible appreciation?

For single family, I would most likely not buy without a garage unless I could include the building of one into my plan. For multi, if there is no option for a garage I would still buy if the numbers were right. If I could build a garage I most likely would to try and attract higher end tenants and/or increase the sell-ability (not to try and get an awesome ROI on the $15,000 investment).

Cheers, Sawyer 

The follow up to this was I got bids and they came in around $18,000 not $15,000 so I decided to shelve the project and think of it in a different way.  I talked to my carpenters who helped rehab and they said they could put up a garage for a lot less but I know the problem is I have to do the planning, get a permit,  get the concrete guy, the electrician, ect, but wait-that's what I do when I do a rehab so I took a class on general contracting, took the post class test and scored 96% and take the exam for my General Contracting license next week.  Problem solved

@Sawyer Lubke undefined

@Bruce Runn Congratulations on working towards getting your GC license! Do you mind sharing the costs and approximate time associated with getting this license? I'm interested to see what the all in cost will be to build now that you will manage the project. This will help us get an idea for the garage builders margin! Cheers, Sawyer 

My bids were $18,000 and $20,000 from garage builders to my specs.  I ran the numbers with my carpenters who do my renovations and with me being the General Contractor, pulling permits, buying all materials, subbing out concrete and electrical, the cost would be about $12,000 or $27/sq ft instead of approx. $40 -45 sq ft.   I don't put a price on my time/overhead/profit as a garage contractor has to but essentially the price for that looks to be about $6-8,000.  A builders overhead is real so I assume that's about 10% which makes the margin/profit a minimum of $4,000/garage.   As I'm working on two more possible purchases right now, it's up in the air whether the garage will happen in Spring/summer based on my schedule since its more of a nice to have versus a need.

@Bruce Runn Doing some of the planning work yourself as a contractor seems to add up to quite a lot of savings. That's awesome you did the class. Can you briefly talk about your class? What was the time commitment? How long does it take to complete the class? How much was it?  Was it worth your time?

It sounds like it could be fun. 

@Lee L.

It's not just a short answer.  I have 4 years experience renovating properties so that was integral in my ability to study and take a GC exam.  It was very worthwhile for me but my plan is to only use it for the properties I buy and renovate.  Just passing the exam and getting a license doesn't mean you should go out and start bidding and doing other people's projects - ask any experienced General Contractor that was brought in to fix someone else's mistakes-I'm a big advocate in something my Dad taught me-"You don't know what you don't know- and there lies the problem."

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