Our clients will tell anyone that our approach to investing is very different from the average agent. Most agents focus on finding properties at a relatively low price for the neighborhood as a whole, focusing more on a discount than anything else, and selling the client on future appreciation.
We’re constantly reminded of the issues with this approach anytime the Great Recession is brought up, yet people still use this strategy.
Our approach is a balance of potential price appreciation and how much of an income stream the property will produce. Sometimes a client is focused more on future appreciation than income, and we look in very specific areas for those properties. Other times a client is more focused on creating income streams for themselves and future generations, so we focus more on properties that will produce a high return with more cash flow.
One of the ways we’re able to find diamond-in-the-rough deals is by focusing on a strategy that can be used to operate the rental in order to achieve the highest cash flow possible.
We try to think of every use for rentable spaces. One example of this is renting out a detached garage as a storage space.
In my opinion, detached garages are a perfect additional income stream for any rental property. When you think about it, detached garages have practically no maintenance needs and can be rented to tenants who want to store boats, extra cars, tools or other miscellaneous items. There’s no plumbing to worry about, and since these tenants only come by every few weeks, there is very little to maintain.
In the past year, we’ve helped our investor clients purchase 8 different properties which included detached garages that could be rented out to third parties (not the tenants in the rental units) for an extra income stream.
One client purchased a newer duplex in the city of Arlington, WA (which happens to have low permit fees and a quick turn around) wtih a huge gravel lot in back. They are planning on increasing their cash flow by spending $30,000 to build a garage with plans to have three separate storage units and the hope of getting $250 per month per storage unit. If this goes as planned, it will be a 30% return on investment and the storage rents will pay for building itself in a little over 3 years!
Some detached garages rent out for as much as $450 per month. Many of our clients have paid for an electrician to wire for PUD to install a separate power meter for the detached garage, but this expense is minimal.
Here are a few things that help increase the rental pricing for detached garages:
- Easy entry for tenants to access their belongings
- Two car garages are ideal
- Alley or on-street access
- Taller garage doors
- Power to the garage, especially when it has it’s own meter
- Add heating for storage units
- Located in town areas
- Well secured
If you like this investment strategy and would like us to help you find a great multi-family property or single family home with a detached garage that can be used for storage let us know! We love treasure hunting.