Do People Actually Rent Garages?
If you do a little research in your area, you may be pleasantly surprised to find out you could be renting out your garage for extra cash flow. Garage rentals are pretty well known to experienced landlords, but if you’re just starting out or haven’t been exposed to this before it can be quite an eye opener.
All over the world you’re finding rental storage places popping up. It’s become so popular there are now dedicated “reality shows” that walk through the lives of people who buy unclaimed storage lockers and sell the items that are left behind for profit.
More and more people just need a place to put stuff and that’s why the popularity of these places has grown. We are a society of collectors and we seem to need more and more doodads to keep up with the Joneses. That stuff needs to go somewhere and a nearby garage may be the solution.
People will pay for convenience and if you have am empty garage they can rent that is just around the corner or even the next neighborhood over, it’s far more convenient than tracking down one of these storage places that may not be as handy. And when you compare square footages, they can be a huge bargain.
But it doesn’t end there.
People also have hobbies. Hobbies that seem to take up a lot of space.
Woodworkers have drills, presses, lathes, saws and more. Mechanics and weekend mechanics have tools and compressors and vehicles and parts and they too need places to leave them.
Small business owners like plumbers, repair people and handy men all need to store supplies, tools and more somewhere and retail space is crazy expensive while commercial space requires huge commitments and also huge expenses.
These are just a few of the types of people that require space. Space that you can rent out for a tidy little additional revenue stream if you just happen to have a detached garage at your rental property.
Detached Garage Is The Key
When you are renting out your garage, detached is the key word here. This is not something you want to do with an attached garage as trying that can open up a whole world of problems.
From noise to security issues to safety issues, it’s just not a road you typically want to travel down and it’s why I like older rental neighborhoods as they tend to have detached garages which are perfect for my rental property wish lists.
What Does A Garage Rent For?
I’ve rented single car dirt floors garages for as little as $125 per month and I have oversized two car garages that are heated that I’ve been able to get $350 per month for and on the very simple end I’ve even rented dirt or concrete parking pads (no roof or any structure, just the parking space) just for someone to store a vehicle on for $25-$50 a month.
With the low end parking space only that is still an additional $300 income a year that I didn’t have before and for the big garage at $350 per month that ends up being over $4,000 in additional income every year!!
There is no guarantee you will see these same rates in your area, they could be lower, but they may also be higher and of course there is a chance it may not even be done in your area, but if you could, wouldn’t an extra few dollars in your pocket help?
Is It Legal?
This might be your most important consideration.
Just because I can rent out a garage here, doesn’t necessarily mean it’s legal where your property is located. So you need to do some homework. And the easiest way to start is to check local ads to see if anyone in the area is renting garages.
You can use Craigslist, Kijiji or the local online sites to start. There are usually local Penny Saver magazines or daily papers that you can also look through to see if you find ads for storage spaces or garages in.
If you find them, it’s a good sign, but your work isn’t done yet, if you don’t it may not mean it’s not possible, it may just not be common practice.
What you really want to learn as you do your research is what laws cover the renting of a garage or storage space. They typically fall outside the jurisdiction of Landlord and Tenant laws, but you need to verify that. Locally for us, renting a garage is the equivalent of renting a warehouse space and the rules are very much in my favor when it comes to payment issues or other problems.
Determining the full legality of it may start with your local Landlord and Tenant services hotline, but it may require you contacting a lawyer who understands local Real Estate law to get the real answers and access to proper leases allowing you to rent your garage out safely and legally.
Heated Garages – Who Pays Utilities
This seems to be one of the big questions that pop up when renting out a garage to someone, especially when the utilities are paid by the tenants renting the house.
Fortunately garages typically don’t use up a ton of utilities. You can typically appease the tenants renting the property by telling them up front when they first are considering renting your property that they are getting a discount on the rent of $XX to cover the utilities used by the garage tenant.
I would typically position this in the $25 to $50 range and if you’re in warmer climates where heating isn’t an issue and electricity is the only consideration it may be less, considerably less to the point it may not even be an issue.
Which brings me to the other common question.
Doesn’t The Tenant Renting The House Get The Garage Automatically?
To put it succinctly, NO!
Now I have had tenants rent the garage from me as well as their suite, but it’s not my preferred way to rent it out. the issue being if the tenant leaves I lose two streams of income at the same time, Now if it’s a $25 parking space it may not be that bad, but if it’s a $350 monthly garage payment plus a $1,000 rent payment, that can hurt a bit more.
So you need to be clear and up front with the tenants who are looking at the rental space to live in that the garage is not included.
Professional Landlord Tip
So here’s a little tip for you if you start collecting many properties with garages. After a while, to run your landlord business you start finding your garage starts to fill up with parts and pieces to run your properties.
From light bulbs you purchase in bulk to furnace filters, they all start taking up space. At a certain point that space may start compromising the space you have for storage at home. So why not rent one of the garage spaces to yourself? (check with your accountant to see what you can and cannot get away with in your area as this may be a free rental or you could use it as a potential tax deduction in some cases).
I personally have a two car heated garage at one of my rental properties that is filled with shelves and all kinds of parts ( too many parts actually), tools and general landlord pieces that I need on a weekly, monthly or annual basis. We store extra furniture there (for our furnished weekly rental properties), renovation materials, and just about everything my wife doesn’t want in “her” garage at our home.
So there’s your primer on garage rentals. So my question for you, is it something you can start applying to your landlord business in the future, or are you already doing it? It’s not going to work everywhere, but if you can make it work it can definitely help you increase cash flow, so I’d love to hear your thoughts in the comments below.
If you enjoyed this article about garages, you might want to check out my Ask the Landlord Article – Marketing Your Rental Garage for ideas on where and how to find tenants – Bill