Fix the 1 car garage or Build a 2 car garage?
Cleveland Heights, OH · Member since 2012 · 91 posts · 14 votes
So I just picked up this property in South Euclid, Ohio. We are still not sure whether we are going to rent or fix n' flip this one, but I am going to ask the question anyways. The house should fetch about $900 a month in rent.
The 1 car garage the house currently has needs:
A new slab, so it needs to be jacked up - $3000
New roof - $1500
Scrape and Paint - $1000
Total - $5500.
I got a quote for a new 2 car garage: Monopour foundation/slab, 20' x 20', vinyl siding, man door, window. $10,500 total price.
What do you guys think I should do? Does a 2 car fetch considerably more rent? Will it largely effect the sale price?
Pictures (6) - http://imgur.com/a/sJ3MS
My experience in Medina county is that a house with a 2 car garage will rent almost immediately...I have a couple and they are never vacant. That said, the difference in rent (in my area) that I can get between a 1 car and 2 car garage is about $75/month. So, about 6 1/2 years for you to recoup the extra $5K putting up the 2 car will cost you. You may be able to get more in Euclid.
If the 2 car garage gets and keeps tenants better than a 1 car, that is worth something and reduces the payback period.
I do not fix and flip so I don't have the experience WRT that.
If it were my property in Medina county, I would not put up the 2 car garage, but you are able to ask more in rent than I can down here and recoup the cost quicker.
I would also think about the unrealized gains by adding the 2 car. In my area, my typical rental gets 7500 on an appraisal, and about 15k for a 2 car. So really your making 2k, and commanding more rent from the 2 car. This depends on the house/market you are in however
I think you should go with the 2 cat garage. I recently built a 2.5 car on a duplex. We had to do a driveway by city code so we went ahead and built the garage. It was around $11,500 for everything so your price should be right in there with the tradeoffs being you have a teardown and rebuild, whereas mine involved new construction and new driveway.
I think a 2 car garage will definately make the property more attractive to renters and buyers. If you figured in garage possibilites into the price at purchase you should be good with the upgrade to 2 car car value wise.
I second what others have said about the two car garage being the best coarse of action. Both higher rent and resale value.
I'd add one new thought to this thread, check with the South Euclid building department before making this decision. Rebuilding the existing one car garage is considered repair. Building a new two car garage is considered new constriction/addition and there is zoning guidelines by street with requirements for yard space (ie can't cover over x% of the lot with building/drive), distance to neighbor, etc.
Sam W. Sam thanks for the info. If you don't mind me asking. What are you getting for a 1200 sq ft, 3 bd / 1.5 bath in Medina?
Grant P. - Just to clarify what you said. You are saying the appraisal value of the houses you own goes up $7500 with a 1 car garage added and $15,000 with a two car garage added?
Kyle Hipp - Yes I had considered the driveway. We already have to resurface it due to the Citys vacant property inspection report, so adding a slightly larger apron shouldn't be too large of cost when we will already have the paver there.
Huggy Baird - Thats a good point about building code. I am having the city inspector come out to release the escrow funds on the roof. I will ask him if there is any problem adding a two car there. Though almost every lot in SE is the same size, and I have seen other investors installing new 2 cars on these lot sizes. Also the city wants the garage. Buliding a new one / fixing the old one is not optional. They require you to have a functioning garage. They say they don't want any more cars in the driveway then absolutely necessary.
It sounds like the 2 car is the way to go for rents or value; however, I'll also say it sounds like your bids for work to the 1 car garage may be too high as well. Assuming this is a normal sized one car garage anyways..
Add to that quote the cost to demolish and remove the old garage and slab as well as permits to build the new garage, There will be an increase in property taxes (and maybe insurance) and you will have 5G less in your pocket to invest in something else. What about electrictiy? How much will that cost to run to the garage or wire into the new building? Will you need permits and a licensed electrician for that?
What if you did nothing or just removed the garage alltogether? Then you'd have 10.5g to roll into another investment. How much does the rent go down without a garage at all? How about just a carport? Can you do any of the work on the existing garage yourself to save some money? Is it he highest and best use of your money?
Lots of things to consider. For a flip I can definitely see added value. For a rental...I'm against it, but I'm not 100% convinced either.
I just looked at the pics. Are you going to widen the driveway? Will there be any backyard left?
A new slab, so it needs to be jacked up - $3000
does it really need a new slab? 3000 seems high even if it does.
New roof - $1500
Way too high.
Scrape and Paint - $1000
Way too high.
I could have that little storage building/garage all gussied up for less than 2000.
I gotta second Brian Hoyt about possibly just getting rid of the garage and charging a little less rent (if you're going to keep as a rental) I've been finding that a big garage is definitely an attraction, but the lack of a garage is not much of deal killer. I've come to the conclusion that above all else, tenant's care about square footage and number of bedrooms. Price it right and it will rent.
Christopher Boggs In Wadsworth I am able to ask about $650-725 for a clean/comfortable 1200 sq ft 3/1.5. Certainly there are homes renting for less, but this is about the top-end for this home here.
John Chapman While garages are not necessarily deal killers, this is Northeast Ohio - very chilly and a lot of lake effect snow. Homes with garages will rent much faster than homes without (at least in my area) - even if the price is higher because of the garage.
Also, tough to compare costs of repairs in Texas to costs in NE Ohio. I would imagine costs are less in Texas - having lived in El Paso and Killeen I know it was possible to get work done fairly cheaply. Not impossible to do in my area, but tougher.
I suggest getting more bids first off.
Secondly, without knowing your market it is hard to say, but if other homes have a 2 car and yours only has a 1 car, you are best served adding the 2 car (with permits). If all other homes in this area all have one or no car garages, I would not suggest spending the money on it.
Brian Hoyt & John Chapman - Rebuilding or Fixing the garage is not an option. South Euclid requires you to fix or replace the garage. I also had to put up 25k in escrow funds in order to purchase this house. I don't get those escrow funds back until I finish all the repairs including the garage. Also Carports, Pre-Builts, Polebarns, and bascially every other cheap option doesn't meet their building code. Btw the cost of $10,500 includes permits
Electricity - The wiring is way out of date and I am required to replace it all anyways. Its is also disconnected from the pole, and I am required to run underground electric from the house. So really the cost of electric is the same excluding the 2 car having a few more outlets. I will need permits either way, and If I don't get them I won't get my escrow funds back
Driveway - I have to re-surface or replace the driveway anyways (not sure till the snow melts) Either way I got a quote of $500 to extend the appron 10' x 25' to accomidate the larger garage, and yes there will still be some backyard left.
Costs
Slab - I got a few casual estimates of $3000, but I had a concrete guy come out today and he quoted $4000 to jack up the garage, tear out the slab, and put in a new one. Which I think is really high, but I found out that in our area the concrete guys gouge in the spring/ early summer since everyone wants stuff done. Due to the weather we can't start pooring here till mid-march
Roof - I estimated this cost, so maybe $1500 is high, but some of the roof boards need replaced. What do you think it would cost?
Paint - again I just estimated. I haven't had to paint the outside of any of my properties yet. What do you think that should cost?
Will Barnard - The houses on both sides have two cars, overall I would say in this neighborhood 70% have two cars, and 30% have 1 cars. Also most of the new garages tend to be two cars, but this is a nicer block of South Euclid that doesn't have alot of rentals
Sam W. - Do you know any reasonably priced concrete guys that work the east side? Also any ashpalt guys?
Huggy Baird - Same Question - Do you know any reasonably priced concrete guys that work the east side? Also any ashpalt guys?
Christopher Boggs I don't have advice to give you as far 1 car vs. 2 car.
However, I usually remove the electricity from detached garages on my lower priced rentals. Not sure of the values where you are. It seems that garage electricity is always rigged up by some hack that thinks he knows about electricity and it's usually a mess. Instead of bringing it all up to code, I will tear it out. I don't want a bunch of hillbillies working on cars out there or using it for a man cave anyway. One of my tenants turned the garage into a "dojo". I think he saw too many episodes of Eastbound and Down.
Also from the pics, that garage looks a little sketchy. Is that a flat roof? If yes, I've had nothing but problems with flat roofs. I would either tear the garage down, build a pitched roof, or build the new garage. I would not replace that current roof with a flat roof.
Rob K - I see what your saying, but unfortunately its not an option. The city requires I rewire the garage, and that I bury the electric line from the house.
I think your cement price at $4,000 for jacking up and out the old slab and putting in a new slab is a decent price. In my experience recently building a new 2.5 car garage the city did not allow me to touch electrical, cement work, or framing. We could side the garage, roof the garage, wrap the garage, dig the trench for electrical. One thing you might wanna look at is if you can run electrical right from the pole to the garage. It might be cheaper than digging a trench. It will be overkill for a garage but you mentioned that it was a more owner occupied neighborhood and that could be a huge selling feature for a buyer to have a garage that they can have a properly powered shop in.
As for your other prices, I still recommend going with the 2+ car garage for the rentability and value play. I believe you can get the roof done cheaper and to reside with vinyl is cheaper and you can easily do that yourself in a weekend.
I'm not sure what you mean by you can't rebuild it and therefore your options are to fix it or replace it...
Based on all the other additional information about permit costs, escrow, etc, it sounds like just putting in the 2-car garage may be a good option.
Wow I feel for you it sounds more like you live in Tyranny falls Ohio.
I left Oshkosh Wi. years back partly because of the tyranny of codes by local building inspectors/nazis. Leaving that cold climate up in WI coming to the Ohio river valley was the best thing I could have done. Shorter winters less code enforcement /tyranny and cheaper deals as well as better roi.
I would just do the 1 car because its cheaper your probably better off if you can save 5k, That 5k is a down pmt on another property at under 50k. Just make up cashflow of 75 dollars a month by using capital on next deal. Wouldnt roi suggest that? compare roi on 5k generating 75 per month vs roi on another rental's cashflow you buy with that 5k.
Im not sure though what 5k buys you but even if its half a down pmt is worth it. If your next property has a 300 dollar cash flow it makes sense to use 5k on next deal because cash flow would return double to you monthly in new deal over what old deal did by putting up 2 car garage. I cant quantify what your vacancy ratio is on a home with a one car vs 2 car because I do agree with above post that homes with 2 car garages rent like hot cakes.
Also Im not sure the 5k you saved is money saved if the home is in a nice area and would be an easier flip with a 2 car? Is this home have a quick exit strategy or hold for long term rental. I think if you plan to sell it within 5 years I would put in the 2 car.
If this was a lower end rental nah one car is good enough but I am sensing this hood is pretty nice with 70% 2 car garages. This might get me thinking 2 car is the way to go and flip this nice little home and get a faster turn on your capital if you can.
If your just keeping this as income property remember these large garages are a pain to clean out if you ever have a tenant that likes to hoard or set up a shop in the garage. This will much more likely happen in a 2 car garage then a 1 car especially with electric that the city is shoving down your throat.
On a lighter note could we joke about burying your code enforcement inspectors with that electric line to the garage? That is so weird they make you have electric in your garage??
Based only on the stats you gave me in your reply, I would go with the 2 car addition.