Spend the Extra Money for Garage?

[Andrew D.]

I recently purchased a property in Cedar Rapids, IA that has no garage.  It is a 1960s built house in a nice neighborhood.  The backyard is huge and could be a nice oasis.  Its way larger than most of the neighboring lots.  It also has more than enough room for a 2 stall detached garage.

My question is whether or not to include building a garage along with my regular house renovations.  The lowest bid I've had on the project is around $16,500 for the concrete and garage erection.  That puts my reno budget on the high side at just over $30k.  

The house is located in a cookie cutter neighborhood of only a few different house designs.  About 80% of the houses have garages.  The house across from mine is the same as mine with no garage and sold recently for $100k.  I bought mine for $67.5k and could have it just as nice as that one for around $80k all in.  My guess is that I could rent it for $1,000 to $1,050 in that case and that would reach my cash flow expectations.

On the other hand a I could splurge on the garage.  If I add that large expense I could probably get $1200 but that might be a stretch.  Much over $1200 in my area you are getting either more bedrooms and baths (this is a 3 bd, 1.5 ba), or a newer house.  So I'd only gain about $150 a month so it would take years to re coup my initial investment.  Most of the houses with 2 stall garages are selling in the $110-125k range depending on upgrades and if they've added a 4th bedroom in the basement.  My guess is that the garage would just add the initial investment in resale.

The other thing I need to consider is how long it will take.  All the concrete companies are booked up so it could easily be late July for this to happen.  The conclusion I keep coming up with is to renovate it the way I usually do and then market it for $1050.  I could finish job in June and shoot for July 1st move in.  The rental market is huge here around that time.  That way I could get it finished and rented and move on to the next house.  I know there will be people that walk away based on no garage but there will be others that really don't care as long as there is a shed for a lawn mower etc.  There is a driveway for 2 cars so there is currently off street parking.

Should I take the extra time and money to build the garage or just do the quick reno and move on?  What would you do?