Landlord Tips: The best rentals to own
It might sound funny and it’s not what you’d think, but my best rental properties aren’t even houses at all, they don’t have most utilities, and the tenants don’t even live there. They’re actually garages! Years ago when I just started buying SFR properties, an old realtor who was training me said he always liked properties with garages. I trusted this guy; he had more money and rentals then me at the time so I took his advice. After he told me why they’re so great I began to look for 2 or 3 bedroom houses with garages preferably separated from the house or with no access directly to the home.
Then, following the old realtor’s advice, I might allow the tenant to include the garage with the property for a premium, and if they didn’t take it I’d rent it out for extra cash. You can even do this with your section 8 properties; just don’t include the garage with the lease. The funny thing is I usually get market rent for the house even without the garage!
After doing this for several years I started to realize how good the garage business really is. The tenants typically only have electric service, no plumbing or heating so I rarely get a maintenance call. Most of mine are rented for residential storage only. I usually know my tenants and I’ve actually have had a waiting list for years since I was a contractor and most of my friends were storage tenants too.
Then I had a duplex with some ground behind it and I built four commercial size garages behind it. Not only did I almost double the value of the property and cash flow like crazy, I had fewer tenant headaches.
Today, whenever I buy a property I’m looking for the extra sweet spot of the garage. Even if that’s just some ground where I can drop a pre-fab 1 car garage for a couple grand on stone for some extra rent. I find that it’ll pay itself in no time.
Comments (5)
I had 1 meter for 4 bays, but I could sub-meter the other bays & chase the tenants every month but for me it wasn't worth it.
Dave Van Horn, about 12 years ago
Did you pay for utilities for the SFR where you rent the garage seperately? In my area it is customary for the tenant to pay their own utilities, meaning you'd need a seperate meter for the garage or else the SFR tenant would be paying for the garage electricity. I suppose you could offer a rent concession for that, but I could see issues arising out of that type of arrangement.
James H., about 12 years ago
Dave Van Horn very nice idea. I'm adding it to my blogs collection of "Non Obvious Ideas to Improve Landlord Cash Flow." Thank you Sir.
Al Williamson, about 12 years ago
Hi Bryan, I actually did stick built garages (24'x45'x12'h) on 4' block wall with roof trusses because I needed to insulate the garages & I don't like flat roofs. (initially I used a bay for my business). I used an 84 Lumber kit at the time & even bought my prints from them for like $10, no architect needed, & actually got it approved by the Twp. but I told them it was residential storage only & not commercial. I went right up to the property line. If I told them it was commercial, that's when all hell breaks loose & you need setbacks & studies, etc. etc. You can try a prefab too. They're usually similar in cost but may save time. We literally built this in a couple weekends. We only ran electric & I include that in the rent ( It was $23 last month). Today I get $165/bay & I have 4 bays. I built this close to 10 yrs. ago for @ $30K with the driveway. Never had a problem with zoning or neighbors but I'm one block off a busy street with mixed properties around me. On one side is commercial offices & garages & on the other side is a quad, & behind me are more garages a buddy of mine owns. Best of luck, it's well worth the return, DVH
Dave Van Horn, about 12 years ago
good post dave..i always knew the value of garages and storage units, but for some reason, never considered building a few garages on a property..i actually have a property on a double lot..maybe putting up a few garages is the way to go..what do they run you? do you do the prefab? how much are you getting in rent? is electric required or have you had garages with no lights?? are you having any neighbors or zoning issues?? thanks.
Account Closed, about 12 years ago