Converting a Garage/room back to garage. good or bad idea

6 Replies

So... I come across a lot of these "3 bedroom" homes, that in reality ,  are nothing but  garage conversions.  People remove the garage door opener and add a hack closet in that area and now call it a room.  blah

So my question. would you open it back up? would it have more value since we are upgrading the entire property anyways? I think the days of closing up a garage to add more value to a home are gone. its ugly and stupid.

Any thoughts?

Happy Investing!

I wouldn't hold a 2 bedroom house for long, but I think a garage has more value than an extra room made out of a garage.

@Dave Carella I really suggest that you ask 2-3 trusted agents in the area what they feel will get highest amount on your appraisal. 

Florida, like Cali are states where people do not need to park for snow, so many people use their garages for offices or extra rooms. 

Also, do your own research and find out out which comps higher in your neighborhood...homes with garages or homes with the extra room. 

Make the educated decision based on your local appraised values. 

All the best!

sjw

@Shawn ward. Solid advice. Thanks.

Market research is your best bet to make this decision. I was reading Zillow's 2017 Consumer Housing Trends Report today (https://www.zillow.com/report/2017/) and it had "Needs and Wants" statistics for renters and buyers. 67% of renters required + desired off street parking/garage and 40% of buyers required ample parking. This report is based on national statistics so I like  @Shawn Ward 's recommendation to confirm local market needs and wants.

Look at the comps, specifically, the days on market for a 2 bedroom vs a 3 bedroom.  Also, look at other houses in the neighborhood. You don't want to be the only house with a converted garage and if a lot of them have converted garages, you are probably ok.  In my market a 2 bedroom house is difficult to sale. Not many people are looking for them. While people prefer a garage, they "have to have" 3 bedrooms. As far as taking living space and converting it to non-living space, my experience has been, it is difficult to make the numbers work, if you paid for the square footage of the converted garage when you purchased it. For example, if it is a 1400 square foot house that you paid $50,000 for and the after repair value is $100/sf then you would be able to sell it for $140,000. If you want to make $25,000 in profit, and closing costs are 9% that gives you a rehab and financing budget of $52,400.  

As a comparison, if you paid $50,000 for a 1,400 sf house and you convert the 2 car garage (400 sf) back into a garage, the house that you are selling is $1,000. The after repair value is $100/sf.  You can sell the house for $100,000.  If you want to make a $25,000 profit and closing costs are 9%, that leaves your rehab and financing budget at $16,000.  Generally, that will kill the deal.

When we get houses that have a converted garage we do everything we can to make the garage look like part of the house.  We eliminate any step down, make the ceiling the same height as the rest of the house, sheet rock the walls, eliminate the door on to the driveway, etc. we generally make the garage a mastered room, with a walk in closet and master bathroom and add a utility room if there isn't on somewhere else. We also will add a small hall so that the bedroom door doesn't open directly into the living space (typically the kitchen). Hope that helps. 

I also see the number of bathrooms. I bought a 4/1 and returned the fourth bedroom back to a carport.   No way someone who needed four bedrooms could live with only one bathroom.  On another home with a converted garage I installed French patio doors and called it an office that could be used as an additional bedroom or family room.

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