Converting your detached garage into a rental space is a great investment because of its great passive income potential as well as increasing the value of your property. Traditional detached garages are smaller in size, making for a cost effective but still large enough rental unit to create a steady stream of income for you.
There are quite a few factors to consider when planning the renovations and timeline for converting your detached garage into a rental property. Keep reading for more details about what you should know while renovating your garage.
Determine What You Need Out of Your Rental Property
While using your detached garage as storage space is a popular way to utilize it, this purpose doesn’t add much value to the property or maximize the space. Detached garages serve as amazing spaces to turn into single-dwelling apartments, either studio or one-bedroom, depending on the square footage.
If you find that your detached garage is being underutilized and want to increase your cash flow, converting it into a rental is lauded by many professionals as a sound investment. Some people who’ve successfully renovated their detached garages even use it as a guest house that they occupy while they rent out the main house. In the age of Airbnb, the potential is amazing.
Essentially, utilizing some existing square footage into more living space gives you more options for renting out the areas of your property you have available and giving every part of your home a purpose.
Once you’ve converted the space into a livable dwelling with electricity, heating, and plumbing, it’s simple to list it on sites like Airbnb and market the space for visitors looking for a place to rent out.
Why You Should Use Your Detached Garage as a Rental Property
Detached garages are often used as storage and exist out of sight and out of the mind of most homeowners, but garages can be highly profitable rental spaces with some renovations. For those in a location with a high volume of tourists or an expensive real estate market like The Bay Area, using a detached garage as an apartment that visitors can rent is a great way to earn extra income.
If you have a detached garage that isn’t being utilized and you’re looking for ways to make the space purposeful and productive, take some time to research what would be necessary to turn it into a livable space. An experienced home remodeling contractor can give you valuable suggestions along with realistic cost projections.
Use your imagination and check out some before and after photos across the internet. Photos are the perfect inspiration from others who have successfully renovated their detached garages. There are some pretty amazing and often very doable examples available to inspire you and give you some ideas you may even want to carry over into your own project.
Factor in Budget Considerations
Converting a detached garage into a livable rental space often requires plumbing and electricity installations, which can quickly cause the price to soar higher than a strictly cosmetic update. The average cost of turning a garage into a fully equipped rental is around $23,000.
Factors that may influence the cost of renovating your garage are:
- What is the total square footage? Depending on how large your detached garage can determine how much materials you’ll need and how long the project will take, which can significantly influence the cost of labor.
- What finishes will you be using? For example, will you use tile or vinyl flooring? Higher priced finishes like tile flooring or granite countertops can add more costs to the budget. Higher quality finishes are usually more expensive, and your decision about which finishes choosing will likely depend on the current condition of the structure.
- Do you need to acquire a permit to renovate the space? Some building fees and permits can add costs depending on local codes.
- What are the average labor costs for the project? You’ll likely end up gathering a few different bids for the plumbing and electricity aspects of the project to see who can give you the best value. Still, it’s always a good idea to research what the average costs are for this type of project in your area to make you as prepared as possible and your budget as solid as it can be.
These are a few major factors to keep in mind when creating your budget for the project.
It’s also smart to outweigh the costs of the conversion to the profit you’re likely to have from renting out the space. This is a good way to see what type of investment you’re getting into.
The cost to plan out the project, hire all the labor you’ll need, pay for the materials, and decorate the finished product can rack up quickly, so you want to remain focused on the goal of renting the space out in the future so you can not only make back the money you spent on the renovations but also turn a profit.
One big aspect of making this a profitable renovation is ensuring that you’re controlling all the things that you can so that when the inevitable problem or issue pops up, you’re as prepared as possible for it.
For steps like gathering any necessary permits and researching which fire and building codes you’ll need to adhere to, these may not seem like the type of steps that are going to help invite people to rent it out but making sure you do these steps properly can end up saving you unnecessary costs in the future.
And the more money you save throughout the process, the better off you’ll be when it comes time to start getting that cash flow and bringing in renters.
Research Regulations and Obtain Necessary Building Permits
Before you begin any major construction or renovations on your detached garage, you’ll want to research your local building codes and building permit requirements. You’ll likely want to find out what the local fire codes state so that you’re following the right guidelines and requirements.
This is a necessary first step to determine exactly what you’ll need to make the dwelling livable and up to your local building codes. Thoroughly researching your local and state requirements when creating a livable space from a detached garage can save you a ton of headaches later on.
It’s best to know exactly what you’ll need and what type of regulations you’ll need to abide by so that you are on the same page with everyone participating in the project.
This is also important for the safety of your future tenants. You really don’t want to be liable for any injuries or problems that come up while renting the property out because of not being up to code or properly following the building requirements.
Hire and Plan Renovations with a Contractor
You’ve gathered your research on building codes, and you know what type of space you’re looking to achieve (studio, 1-bedroom). Now it’s time to start vetting contractors.
While some home renovations are simple to learn from YouTube videos and how-to articles on the web, when it comes to bringing a new dwelling up to code and completing semi-heavy renovations that will stand up to long term rental wear, hiring a contractor is usually the best idea.
A professional contractor is a great asset to have along the journey of converting your detached garage. When looking for who the best contractor for the job is, use these tips:
- Ask neighbors and check online reviews for local contractors that have successful portfolios of previous projects. Examining a contractor’s previous projects is a fantastic way to get a feel of their quality of work and if they’re truly experienced in the type of renovation, you’re needing.
- Be specific about what you’d like to do with space. Being upfront about your goals and vision for the renovation will help you find a contractor that is knowledgeable about every aspect of the project.
- Make it a priority to hire for quality. While it’s important to keep an eye on your budget, it’s important to remember this is an investment. If you plan to use this garage as a successful rental property for years to come, you’ll need to ensure it turns out to be a high-quality space that renters will be willing to pay money to stay in. A professional and credentialled contractor is not likely to be cheap. Be prepared to pay the cost of a contractor who’s trustworthy and that can get the project done with high quality.
Hiring a contractor can be a daunting process, especially if you’ve never needed one before. Don’t be afraid to lean on those word-of-mouth suggestions and take a look through online reviews. A successful contractor can make all the difference in how smoothly this garage conversion can go.
Also, be prepared to schedule your detached garage conversion around a contractor’s schedule. If they’re top quality, they most likely have a few projects going on and will need some time to schedule your renovation.
When you find a contractor with great reviews, similar projects from the past that are impressive, and a price that fits in your budget, be prepared to wait a little while until that perfect contractor is ready to start your project.
All the waiting and planning will be well worth it when the garage conversion is complete and you have renters lining up to make a reservation.
Make Sure to Remain Flexible
With most types of home and building renovations, there is a possibility that you’ll come across some roadblocks or problems during the process. The plumbing or electricity might begin, and you find out there are problems with the pipes or wiring that you were not aware of, and it may bring extra costs or a delay in the timeline.
The important thing is to be prepared for some things to go wrong. Whether that’s planning the construction during the off-season so that it’s ready to go when visitors are more likely to come and rent it or adding a bit more cushion in your budget, it’s always a good idea to look ahead and be prepared.
Even with solid preparations and a trustworthy contractor on your side, any renovation project is bound to come with some stress and anxiety.
When you plan well, leave a bit of cushion into your budget and timeline, you’re far less likely to be completely derailed by unexpected issues in the plumbing or electricity, which are often difficult to predict until the work begins.
Decorate Purposefully to Invite Visitors to Rent it Out
Once your renovations are complete, it’s time to add in the furniture and decorate! This is your time to turn the space into a place where visitors will want to spend money to stay.
The small amount of square footage will make decorating quite simple when it comes to how much furniture you’ll be able to place inside.
Whether your detached garage is now a small studio or a 1-bedroom apartment, ready to rent out, it’s a good idea to spend some time thinking about what kind of style and decor you want to include. These small touches can help amplify the space and make it more inviting for potential tenants.
Many visitors who rent out small spaces for short amounts of time are looking for spaces they can quickly check into and start relaxing immediately. Think about what you enjoy when you visit a new space. You can also think about the character of your neighborhood or town.
If you live near the beach, are in a modern city, or reside close to nature, tying together the atmosphere of your new rental space with the culture around you is a great way to invite guests and make it special to renters.
If you have room in your budget to hire a decorator or stylist for space, that’s even better. Professionals tend to be more knowledgeable about what works and what invites people to live in a space.
A purposeful and consistent decorating style, especially in a small space like a detached garage, makes the rental look like a professional and inviting place that has time and money put into it for the comfort and experience of future residents. With an amplified experience and atmosphere, you’ll be able to justify your rental price as you’ve invested in the space being a livable one as well as a stylish one.
However, you don’t have to be a professional designer to put together a clean and modern space that’s inviting to future tenants. Check out these before and after photos of a detached garage renovation for ideas about what design options are out there.
Look at popular photos of detached garages, one-bedrooms, and studios to get an idea of what will make the space as attractive as possible. Most renters simply want a clean and safe space to rest and hang out but adding a bit of style and decor can help the space go a long way and get more and more people lining up to rent it out.
Determine the Rental Price of Your New Rental Property
While this factor should be a factor in the budget you set to renovate the detached garage, once the project is complete, it’s time to list the space on rental sites so that interested guests can begin scheduling to stay in the space.
When you list your newly renovated detached garage, here are some factors to keep in mind when setting the rental price:
- Are you looking for long- or short-term rentals? This can determine how you set your price, whether it’s monthly or per night. If you’re renting it out only in the short term, you may want to think about the increased amount of cleaning and maintenance costs.
- Is there a kitchen or kitchenette? Special amenities bring more value to space and can make it worth increasing your rental price if there are particular perks like a full stove or oven.
- Are there laundry amenities? Having on-site laundry is a huge plus for long term renters.
- What is the quality of the flooring, cabinets, countertops? The more updated and modern the finishes are, the more amplified the space is and the greater likelihood of an increased rental price. These finishes add to the appeal of the space, the value of the dwelling, and the atmosphere of it.
- Where is the rental space located? Are you close to downtown, near the water, etc.? Location plays a role in the price of any type of real estate. It’s important to take into consideration whether you’re in a popular destination or part of town that many visitors will be willing to pay for so that they can enjoy greater convenience during their visit.
All of these things can be helpful in determining how much you plan to charge future residents. If you’re looking to have short term residents, you’ll also want to take into consideration recurring fees like maintenance and cleaning fees.
You want to be as fair and competitive as possible so that potential visitors understand the value of your rental. If you’re offering a high-quality experience in a prime location, make sure your rental price reflects that.
Element Home Remodeling
Element Home Remodeling is a home remodeling and addition contractor located in Mountain View, Ca. We serve the entire Bay Area and are one of the highest rated home contractors in The Bay Area. Contact us today to schedule a free consultation for your next renovation project.
