How to value a garage refurb

[Ian Jaeger]

Hey all, recently bought a property here in Dallas and am doing some work to it prior to doing a house hack / airbnb thing with it.  The majority of the house was actually in pretty good condition, but the garage was a wreck.  

I'm trying to set up a line of credit to smooth out the cash flow for the refurb and one of the things I'm struggling with is how to 'value' a garage refurb.  Intrinsically, there's value to turning an old, dingy, rodent-infested, unfinished dirt-catch into a clean, well-lit, nicely finished space complete with a stainless workbench with sink / drain, cabinet enclosed, stacked washer/dryer, matching cabinets around a large gun safe and the water heater.  And Epoxy/Poly-U floor coating.

Does anyone have any information on what a comparable set of properties with the only difference being a clean, finished garage versus an original, unfinished space is?

-Ian

[Bruce Lynn]

I personally give no value to enclosed garages....because now it doesn't have the garage.  So you can add for the room, but then I subtract for the garage.  I suppose if you AirBnb it and you can get extra rent out of the space, vs it being a garage, then you could back into your number based on the income you generate for the house itself, and then how much extra you're able to get for the rehabbed garage space.

[Andy Mirza]

@Ian Jaeger I've talked to appraisers about situations similar to this. They've told me that they'll give value to something (like an unpermitted room addition), if it's acceptable as normal in that market. They appraise what's actually, physically, in front of them. If it's something common to that market that buyers will pay more money for, then they'll include it in their opinion of value.

Another example is a pool. In some areas, pools are essential and expected. In other areas, it might be a luxury and add value. In other areas, a pool might make absolutely no difference and won't add a penny to the property value.

Although your garage conversion might add value to what you're trying to do, it might not necessarily translate to added property value.

[Ian Jaeger]

@Andy Mirza

Not sure I was totally clear; I’m not closing this off for a room. It’s going to be a garage, but finished out with epoxy floors, good lighting, actual cabinetry, and electrical for a real workbench or Tesla charger.

Here in Dallas, people do take pride in functional garages. And there are some of the new build houses where they literally spend more in the garage than in the family room... I’m not that deep into it, but definitely looking to make this a big upgrade.

I’ll post pics as the work progresses... or maybe start a thread and just link to that.

[Andy Mirza]

@Ian Jaeger Whatever you do with the garage the same principles apply. Are your garage upgrades what's generally expected in that neighborhood. If so, the appraiser may give you some value for it. If it's not a widespread expectation in the community, he won't.