All Forum Posts by: Aaron F.

I am just starting to separately rent a detached garage off of a duplex I own. I am thinking the same thing you are, and that is that this would be great to do more of. 

I think one problem is going to be getting the land split so you can buy only the garage.

One guy in an old post said he builds detached garages on every property he has if they don’t already have one. Makes separate access so he can rent to the residential tenant or to someone else. 

I found your post because I am searching garage investing myself. There’s not a lot of recent discussion about it but there are a few old posts. I am just starting to separately rent a detached garage off a duplex and it made me think I should do more of this. 

You said the numbers look good. How do you mean? It looks like you’d be losing a lot of money to hold onto it. Would you try to sell for appreciation later to make your profit?Or are you expecting garage rents to rise as the area appreciates?

I haven’t used grip strip but have had bad times with other adhesive flooring products. I’ve used click lock on many projects and have been very happy with it. 

What are your numbers? You have a support team in Indy?

All utilities separately metered? Meaning 4 furnaces and 4 water heaters? Here is my quick math for self managed.   

45600 gross

-4560 vacancy

-2600 taxes

-3000 insurance

-4000 cap ex

-2000 repairs

29440 NOI, 9.2%

Debt:

80k down, 240 mortgage

-15456 debt service 

13984 cash, 17.4% ROI + debt pay down

You could do a lot worse. Do you like the place? Do you like the area? Would you go there at night?

a few observations: 

Evictions are not criminal.

Criminal convictions can be deferred and not considered a conviction even though they did the crime. Might be better to ask about charges.

Could ask about smoking. 

Get experience and get money. Maximize your savings; 40-50% of income would be great. Get excellent credit. This is a great place to learn from experience of others. Listen to the podcast and then search forums for topics that you hear about.

Some things I use all the time: Learn how to analyze deal financials and look at tons of them. Go to open houses and pretend: Inspect foundations, utilities, mechanicals. Learn from YouTube pros. Estimate rehab costs. Read on here about making offers. Learn rehab skills so you can buy fixer uppers. Appeal tax assessments. Connect with a team. Landlord tenant law. Listings, screenings, showings, applications, leases, managing tenant issues... 

You don’t have to master everything up front but get your feet wet while you’re saving for a down payment. Then dig in deeper on education as you come to different stages in the process. 

Oh so I’m off. I thought you were netting 8950 before debt. You’re negative cash flow but still have debt pay down and a shot at appreciation. I personally would have passed but I’m a cash flow guy. I think real estate carries too much work and risk to not get paid for it. But you could kill on appreciation. I just don’t know. 

8950 is NOI. Only ROI if full cash. If 20% down at 4.5%, you still have 7910 on 51400 invested. That's a 15.4% ROI excluding debt pay down and a shot at appreciation. That is a good investment. 3.5% on cash would be kind of ridiculous, just in my personal opinion.

The lease I use requires any added occupants go through standard screening process and boyfriend would fail that screen. Bringing him in anyway, which is likely, would be a breach of lease and I would evict. I would like to avoid all that ahead of time, though, by encouraging her to find acceptable housing before he moved into mine.

I would approach that conversation as being very understanding that she would want a good place to live with her boyfriend but that he just will not meet criteria to stay in her current home so she should start looking ASAP.