As an investor, you should already know the factors and features you should consider before investing in a property. Features (like kitchen, bathroom types, garage, number of rooms in the property, and so on) and factors (like location, property size, age of home, social amenities, and so on) can significantly impact the property’s value. That means you need to be careful and know what you want when investing in a property.
With that in mind, if you find a property that ticks all your checklist but has no garage, should you proceed or dump the property? The answer to that question depends on several factors. So, what are the variables that would define your investment decision with this type of investment property? This article has answers to everything you need to know before investing in a property without a garage. If you want to know more about this, keep reading!.
Does a Garage Add Value to a Home?
While most homeowners don’t use the garage for its intrinsic purpose, they view garages as a beautiful addition to their home. For some, the garage is a storage room. While for others, it’s an extra room. That shows having a garage(attached or detached) can boost your property’s resale value. The question is: how much value does a garage add to a house? And how much is a garage worth in an appraisal?
According to Home Advisor, the average cost of building a garage is between $27,000 and $40,000 — about $50 per square foot. In general, this means that a single-car garage can cost between $16,000 and $27,000. And the average cost of a double-car garage is estimated to be between $14,500 to $40,300.
However, according to Remodel magazine’s 2015 ROI report, the national average ROI for a 26-by-26 ft detached garage that has an estimated cost of about $52,000 is 65 percent. That means if the cost of installing a garage is $40,000, you are going to recoup $26,000 of your construction cost.
Moreover, while a garage adds a monetary value to the property, there are some other non-monetary values that a garage can also add to your property. A property with a garage has always been in demand. A survey by impulse research showed that about 80 percent of homebuyers factor in the garage when making their buying decision. That means there is a high demand for properties with garages. And so, you won’t have to go through some unnecessary negotiation rounds with a buyer.
With what we discussed in this section, we can say a garage is as valuable as any other home feature. But note that a house without garage is just as valuable as a property with a garage. So, deciding which is best depends on many factors, which we’ll discuss in the next section.
Things to Know When Considering Investing in a House Without Garage
Buying a house without garage depends on several factors, like buying a home with a garage. So, in this section, we’ll discuss the things you need to consider to make informed decisions when considering a home without garage. Without ado, let’s dive in!
The top three significant factors in real estate are LOCATION, LOCATION, AND LOCATION. Yes! That’s no mistake! While there are also some important factors (like amenities and neighborhood) to make the right decision, location is the most significant. Whether you’re buying a property to fix and flip, or you want to invest long-term, the property’s location will define your decision.
So if you want to invest in a house without garage, consider the location. How are surrounding homes designed? What do prospective home buyers or renters in the locality want? You wouldn’t want to invest in houses with no garage in an area where every home on the street has one (garage) because that could affect your property’s price.
Your Investment Strategy
After checking the external factor (location), you should also look inward — what’s your investment strategy? How will it affect your profitability? Your investment strategy defines who your end buyer would be. So, whether you’re a fix-and-flip investor or a rental property investor, you also need to consider what your prospective client wants — all strategy depends on the clients.
If you’re a fix-and-flip investor, your prospective clients are likely homebuyers who want a permanent residence. They want a home where they’d live for ten, 15, 20 years, or even for life. So they’d prefer a property that has what they want, and so, they won’t likely budge for any changes. So if you have a house without garage in a location where all homes on the street have one (garage), you might likely not find someone willing to buy that property from you.
Likewise, as a rental property investor, your clients are renters. So, if you invest in a house without garage in a neighborhood where every home has one, you can conveniently find someone willing to rent the property. Your prospective clients are only looking for a place to live temporarily. So unlike homebuyers, renters can likely adjust their checklist because it’s not their permanent residence.
Perform a Comparative Analysis
As an investor, you should already know, by now, that property valuation is as important as location and any other factors. Know the value of the property you want to buy. So just because your property has certain features doesn’t mean you should overpay. Likewise, your property lacking some quality doesn’t also mean it’s not a better investment. To determine the value of the prospective property, use comparative market analysis.
What is comparative market analysis (CMA)?
CMA is an investment analysis tool used by real estate agents and property investors to determine the estimated value of a property. This tool helps determine the property’s selling price based on similar properties sold recently. The strategy compares your prospective house with other properties in the neighborhood with the same number of rooms, design, space, style, and condition. Below are some ways to conduct CMA.
- Talk to a real estate agent: One way to determine the comparative analysis of the real estate property is by talking to an expert, and in this case, a real estate agent. An experienced real estate agent, because of their experience, can accurately determine the estimated value of a property. They know how to navigate any complexity that you may not be able to as a real estate investor.
Moreover, a real estate agent’s vast knowledge and social network make it easier to find similar properties. When you’re still looking for buildings with similar features to your property, an experienced real estate agent already knows where these properties are and their price.
- Using a listing website: with listing websites like mashvisor, you can also determine the value of a property. But unlike talking to a real estate agent, a listing website automatically calculate the value of the property. Tools, like the Mashvisor property finder, can help you do the technical work and thereby skip the hassle involved in doing the CMA manually.
What is a Mashvisor property finder? And how does it work?
Mashvisor property finder is an analysis tool that uses artificial intelligence (AI) and advanced algorithms to determine and analyze a property. This tool determines a good investment by calculating the net operating income, cap rate, and rate of return. And by comparing the property to similar properties on the database.
Furthermore, Mashvisor property finder calculates the rate of return for Airbnb and long-term renting. And this makes it easier for an investor to determine the perfect usage for the property. To use this tool, all you have to do is enter the necessary information and let the property finder do the magic!
Local/State Law and HOA Rules
The local and HOA rules are also another factor to consider when buying a property without a garage. According to Value Penguin, about 91.3 percent of American households report having access to at least one car. That means your prospective tenant or buyer would likely have a car and need somewhere to keep it safe. So, before investing in that house without garage, how do you plan to solve the no garage problem?
There are several ways to solve the problem, including street parking, paying for external parking space, and building a detached garage or carport. But before deciding on this, you need to check your local laws and HOA rules. Does the rule support new construction or street parking? If it does, what’s the incurred cost? And if it doesn’t, does the law support adding a detached garage to a house? And what are the alternatives provided by the HOA for homes without a garage? Knowing this beforehand will not only help you make an informed decision, but it’ll save you from unnecessary stress.
Check if a Garage is Installable
Sometimes buying a house without a garage isn’t the problem because you can install one if you have the financial capability. The problem with buying a house without garage is that adding an external garage to the property may look odd. And that means instead of increasing the property’s value and attracting buyers, it won’t and could scare off prospective buyers.
So before buying a property without a garage, check out if a garage is installable. Will it be aesthetically appealing to install a detached or attached garage? Is there enough space around the property for this type of construction? What does the local law say about constructing new structures? Or does the HOA allows for this type of construction? Answers to these questions will help you make informed decisions.
Moreover, the other problem with installing a garage is incurred costs — contractor fee, permit, material purchase, license, etc. So even if buying a property without a garage is a better investment based on your previous research, you also need to verify the cost of installing one. Is adding a garage a good investment? What’s the ROI? Is installing a garage the right decision? Before going all out on your investment, talk to an experienced contractor.
How Safe is the Neighborhood?
Apart from aesthetics and value, a garage also gives peace of mind. Keeping your car in a garage is safer than keeping it on the street. It protects the car against vandalism, theft, and accidental damage. Having a garage can even reduce your car insurance policy because of the security it offers.
So if you’re considering buying a house without garage, does the locality have a low crime rate? Is the area prone to vandalism? What’s the violence level? To determine the safety level of your prospective neighborhood, here are some steps:
- Use a crime map: with a crime mapping tool, you can detect an area with a low or high crime rate. A crime mapping service allows you to input your address in the space provided and determine the crime rate in the neighborhood. Cityprotect and spotcrime can help you determine which city is safe. All you have to do is visit any of these sites and enter the neighborhood’s address in the spaces provided.
- Visit the area: Schedule a visiting time and drive around the neighborhood looking for signs of vandalism and violence. You should note that a safe locality usually looks clean. So, while touring, check around for numbers of unkempt homes, broken windows, overgrown yards and walkways, and so on.
- Check out the number of listed properties in the locality: The number of listed homes is another significant sign that a district is unsafe. Even if the houses aren’t for sale because of the high crime rate, empty homes can also attract and harbor criminals and makes the locality a dangerous place to live.
Should You invest in a House without Garage?
Like we said in the introduction, there is no definite answer to this question. That’s because the investor’s choice boils down to personal preference. However, if you find yourself in this situation where the property ticks all features on your checklist but doesn’t have a garage, this article has provided everything you need to make an informed decision. So with the appropriate steps, you can make an informed decision.
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