A garage conversion turns an attached garage into a functional part of the home. This may seem like an easy way to increase your heated square feet and potentially add a room or bathroom to the count, but several factors need to be considered before moving forward. Increasing the square footage may seem like it will increase resale value at first glance, but first you must consider the costs of the project, the return on investment, the demand for your market, and the logistics of the conversion.
Costs of garage conversion
Home Advisor (NYSE: ANGI) found that the average return on investment is 80% for a garage conversion, depending on the extent of the renovation and the market demand. Not great, but not terrible either. With the national average hovers right around $13,000, this isn't a small-ticket item for a renovation. The costs can vary greatly depending on what the finished room ultimately will become. If you're simply converting it into a utility room or office workspace, it may only cost $5,000 to $6,000. On the other hand, if you're seeking a secondary rental, bedroom, guest house, or anything that includes a kitchen or bathroom, you could be looking at costs closer to $30,000.
Demand for garage conversion
The National Association of Realtors found that over a quarter of buyers rate a garage as being one of the most important home features. That's a pretty significant portion of potential buyers you're eliminating if this conversion will be for a flip or potentially even a rental. Interestingly enough, garages are typically in high demand in both urban and rural locations. City dwellers have to fight for a parking spot on the street as well as worry about tickets, dings and scratches, the snow plow burying the car, and a host of other problems. It's quite likely that living with a little less space is more appealing than having to park off the property. In rural locations, there's often a premium on a garage for storage space for multiple vehicles, various recreational vehicles, sporting equipment, and more.
Considerations for a garage conversion
If you do decide the numbers work for your market after talking with a realtor and licensed contractor, then you'll need to consider a few more important points before forging ahead.
- If there's a driveway or other protected parking space available, losing the garage means being exposed to the elements and potentially having to fight for parking spaces. Is that a compromise buyers in that area are willing to make?
- Assess whether there's enough storage space elsewhere in the home for all the items that inevitably get stored in a garage. If the house is light on storage, you might want to reconsider.
- Determine if the municipality and neighborhood even allows for garage conversion, what the cost of the permits will be if allowable, and what the construction requirements dictate.
- The height from finished floors to ceiling needs to be eight feet or greater for a habitable room. If the ceiling or roofline is lower in the garage area, you may have to excavate the floor or raise the roof, adding significant cost.
- If the garage is below the grade of the house, how will you waterproof and drain it?
- If installing a bathroom or kitchen in the conversion, how will you get plumbing into the garage if it doesn’t already exist?
Garage conversions can be worthwhile for the right home, but to ensure you get your money’s worth, consult with a Realtor, local municipality, and a licensed contractor before deciding if it’s a good fit for your next investment. This decision is a lot more complex than updating a kitchen or changing out the A/C. To protect your return on investment, it's critical that a garage renovation is done well so it appeals to the buyers, is permitted so fines aren't incurred or to avoid issues at closing, and is cost effective for you.